Imperial Brands cuts interim dividend as pre-tax profit declines in the first half of fiscal 2020

In its report on Tuesday, Imperial Brands (LON: IMB) revealed an increase in its revenue in the 1^st half (H1) of fiscal 2020. The company also announced to have slashed its interim dividend by around 33%. Imperial Brands pre-tax profit in H1 came in lower than expected on Tuesday.

Imperial Brands recently sold its hand-rolled cigar business for £1.1 billion. In the first half of the financial year that ended on 31^st March, the company reported £785 million in pre-tax profit that was lower than £1.02 billion in the comparable period last year. The company printed 103 pence per share of adjusted earnings.

Shares of the company were reported roughly 2% down in premarket trading on Tuesday. Learn more about how to choose winning stocks.

Imperial shows robust growth in its NGP portfolio

In terms of revenue, Imperial recorded £14.7 billion in H1 versus the year-ago figure of £14.39 billion. The British multinational company attributed the increase in revenue to a strong underlying performance of its tobacco offerings and a robust growth in its NGP (next-generation product) portfolio.  

Imperial also highlighted on Tuesday that tobacco volume in the first half dropped to 114.6 billion stick equivalents from 115.2 billion stick equivalents in H1 of fiscal 2019. On the net revenue front, its NGP portfolio and tobacco products saw a 0.9% decline to £3.59 billion in H1 as compared to £3.65 billion last year.

The tobacco company also announced a 41.7 pence per share of interim dividend on Tuesday that marks a 33.3% cut on its interim dividend in H1 last year. CEO Alison Cooper of Imperial Brands called the H1 results disappointing and accentuated that the company will commit to exploring opportunities that can result in enhanced performance.

CEO Cooper expects a more pronounced Coronavirus impact in H2

Cooper further added that the impact of the Coronavirus pandemic that has so far affected 246,400 people in the United Kingdom and caused more than 34,500 deaths, was minimal on trading in H1. In the second half, however, the CEO warned, COVID-19 impact is likely to be much more pronounced.

At 1,545 pence per share, Imperial Brands is currently around 17% down year to date in the stock market after recovering from a low of 1,276 pence per share in late March. Its performance in 2019 was not reported encouraging either with an annual decline of a little over 20%.

At the time of writing, Imperial Brands is valued at £14.64 billion and has a price to earnings ratio of 14.62.