Investment Column: Imperial can still find growth
Tuesday 02 December 1997
Judged by yesterday's results, that is no surprise. Imperial reckons the UK cigarette market shrank by 5 per cent last year as a result of sharp increases in tobacco duty. With the price of a packet 19p dearer from yesterday, consumption is bound to carry on falling. And since the price hikes are prompting smokers to switch to cheaper brands, Imperial is also struggling to hang on to its market share. The looming advertising ban will make it even harder for the group to defend premium brands such as Embassy.
That said, Imperial has several factors in its favour. In true Hanson form, the management keeps finding new ways of squeezing extra productivity out of the business. Then there's expansion in international markets. Strip out the effects of the strong pound and the first-time contribution from cigarette paper maker Rizla, which Imperial bought in January, and underlying profits in the international businesses rose 17 per cent. That's in spite of a disastrous 24 per cent slump in French volumes as a result of a government price freeze.
Finally, there's Rizla, which chipped in operating profits of pounds 16m in eight months. Although Imperial has already squeezed some cost savings out of the company, other measures, such as merging the sales forces, have yet to show up in its bottom line.
All this means Imperial's profits should continue to grow. BZW expects an 11 per cent rise to pounds 340m this year, putting the shares, up 1p to 395p, on a forward earnings multiple of just nine.
Although twin threats of taxation and litigation justify a discount to the market, the current rating makes no allowance for Imperial's growth potential or the possibility of a bid. Good value.
- 1 Crystal meth addict 'gouged out his eyes and ate them' while high on drug, Australian MP claims
- 2 As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
- 3 The ten most unequal developed countries in the world
- 4 Saudi Arabia 'seeking to head United Nations Human Rights Council'
- 5 Toddler throws a tantrum at the White House – in front of Barack Obama
JK Rowling horrified by Harry Potter actor Matthew Lewis's raunchy photoshoot
Saudi Arabia 'seeking to head United Nations Human Rights Council'
The ten most unequal developed countries in the world
Toddler throws a tantrum at the White House – in front of Barack Obama
Irish people are travelling home from all over the world so they can vote to legalise gay marriage
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
Report finds that Britain's wages are the most unequal in Europe
Almost a third of school pupils believe 'Muslims are taking over our country', study claims
The day that Britain resigned as a global power
Gay marriage 'Bert and Ernie' cake bakery found guilty of discrimination in Northern Ireland
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...