Imperial Brands(US:IMBBY)2021-05-18 15:12Financial Data and Key Metrics Changes - The company reported a net revenue growth of 3.5%, driven by strong pricing in tobacco and better NGP sales against a weak comparator period [12][23] - Adjusted operating profit increased by 8.1%, with underlying tobacco profitability growing almost 5% [14][30] - Net cash flow for the 12-month period was GBP 2.5 billion, supporting debt reduction priorities [15][31] - Adjusted net debt to EBITDA ratio improved to 2.6x, down from 2.7x at the end of September [33] Business Line Data and Key Metrics Changes - Total tobacco volumes declined by 3.3%, with a 1.3% reduction from the global duty-free business [21] - NGP revenues increased by 16% against a weak comparator, benefiting from targeted investments [23][62] - Underlying NGP operating income improved by GBP 46 million due to a more targeted investment approach [28] Market Data and Key Metrics Changes - Market share in the five priority markets increased modestly by 6 basis points, reversing a 37 basis points decline from the previous year [12][40] - The U.S. market saw share growth in cigarettes, with a focus on maintaining share in the premium value segment [43] - Northern European markets benefited from higher domestic sales and lower levels of illicit trade, while Southern European markets faced volume reductions [22] Company Strategy and Development Direction - The company is focused on implementing a new strategy aimed at stabilizing market share and improving performance in priority markets [10][36] - There is a clear market prioritization in place, with investments realigned to support strategic initiatives in the five priority markets [16][39] - The company aims to build a successful NGP business while supporting harm reduction, with plans for market trials in heated tobacco and vapor [55][61] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver full-year results in line with guidance despite ongoing COVID-19 impacts [11][72] - The outlook for the second half anticipates modest growth in tobacco profitability, with continued investments in NGP [73] - Management emphasized the importance of consumer insights and data in driving future strategies and operational changes [64][66] Other Important Information - The company is undergoing leadership changes, with a new Chief Consumer Officer appointed to enhance consumer engagement [65][69] - The organizational structure is being simplified to improve efficiency and focus on strategic priorities [68] Q&A Session Summary Question: On leverage and share repurchases - Management acknowledged progress in deleveraging but noted that currency fluctuations have impacted net debt levels [80][81] Question: On Pulze product launch and patent litigation - Management indicated that the Pulze product has been in the market without litigation challenges, suggesting confidence in the upcoming launch [84] Question: On pricing architecture in Australia - Management expressed confidence in the pricing architecture, stating that recent share losses were due to strategic price increases [107][109] Question: On U.S. vapor market turnaround - Management plans to reset marketing and route-to-market capabilities for the blu brand, aiming to regain lost market share [110]