...Solid Profitability: Imperial Brands PLC's trading performance and cash-flow generation in the financial year to 30 September 2016 (FY16) adds further to its improving financial profile compared with FY14 and FY13, when profits contracted in many of its core markets. The significant revenue growth has been mainly driven by the acquisition of US cigarettes brands (GBP682m net revenue increase). The FY16 EBITDA margin (calculated against the company's economic net revenue of GBP8.0bn) improved to 47% against 46% in FY15, thanks to the US acquisition and a satisfactory achievement in cost optimisation. We consider this level strong for the rating. Operating Efficiency: The company intends to spend GBP750m over the next four years to reduce complexity, drive operational efficiencies and secure additional global procurement benefits. This should help deliver additional savings of GBP300m annually by 2020 on top of the previously announced GBP300m savings that the company is targeting by FYE18...
