Imperial Brands To Revise Dividend Policy, Launches Share Buyback Plan
British tobacco company Imperial Brands Plc on Monday launched plans to buy back shares worth up to £200 million and said it would revise its dividend policy from the next year.
The company reaffirmed a 10% increase in the final dividend for the current financial year and said its dividend policy would be more progressive going ahead and payouts would grow annually from the next year, taking into account the company's underlying performance.
The maker of Davidoff, Parker & Simpson and Gauloises Blondes cigarettes is looking to invest more in its vaping products such as blu e-cigarettes and other growth areas as sales of traditional cigarettes fall.
The company's shares, which have tumbled more than 17% so far this year, were expected to rise as much as 4%, according to premarket indicators.
Imperial also said plans to sell its global premium cigar business in a bid to shed assets worth £2 billion by May 2020 was on track.
The company said the revised capital allocation policy will allow investment in both organic growth and M&A opportunities in tobacco and next-generation products.
“Given IMB's valuation, we do not believe the market was rewarding its current div policy and view the change as an opportunistic opportunity to reduce leverage and buy back shares at depressed levels,” Credit Suisse analysts said.
Imperial also looks to deliver net debt to core earnings ratio of 2-2.5 times.
The company reported weaker-than-expected sales of its e-cigarettes in May, citing a slowdown in the United States.