Imperial Brands share price rises as group flags currency benefits

Company stands by full-year forecast

Imperial Brands share price rises as group flags currency benefits

Shares in Imperial Brands (LON:IMB) have advanced in today’s session, after the company said that it was expecting a boost to revenues and profits from favourable currency movements. The update came as the tobacco group reiterated its full-year guidance.

As of 14:35 BST, Imperial Brands’ share price had added 0.42 percent to 3,841.50p, outperforming the benchmark FTSE 100 index which has slipped into the red and is currently 0.35 percent worse off at 7,348.18 points. The group’s shares have lost 0.5 percent of their value over the past year, but have gained some eight percent in the year-to-date.

Imperial Brands announced in a statement today that it expects its first-half revenues and earnings to be ‘strongly up’ at actual exchange rates. The company flagged a currency translation benefit on net revenue and profit of about 13-14 percent, at current exchange rates, having benefitted from the slump in sterling against the US dollar in the wake of last June’s Brexit referendum.

On a constant currency basis, however, Imperial Brands cautioned that it expects lower revenue and profit, with a stronger second-half performance, while confirming that it is on track to meet its full-year guidance.

Reuters quoted analysts at Jefferies as commenting that it would have been a big shock if Imperial had not stood by its forecast, given that it had already called for a particularly weak period, with organic earnings before interest and tax (EBIT) down by a high single-digit rate.

“To miss this would have raised serious questions,” they said, adding that Imperial’s current share price does not factor in the success of its new strategy and investment.

“We also see an increasing probability of a take-out over the next 12 months,” Jefferies pointed out. Imperial Brands is scheduled to update investors on its half-year performance on May 3.

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