Bristol-headquartered tobacco giant Imperial Brands has increased shareholder returns on the back of new product growth and a reduction in debt.
The FTSE-100 company, which is based on Winterstoke Road and is behind brands including Davidoff and Golden Virginia, said trading was in line with expectations.
Imperial told investors on Tuesday that capital returns to stakeholders for the financial year ending 2025 would rise to around £2.8bn, including a share buyback of £1.25bn – an increase of 13.6%.
It also said there would be a cash dividend of around £1.5bn payable next year as part of a move to four equal quarterly dividend payments in the future. The annual dividend for 2024 rose by 4.5% to 153.43 pence per share.
“We are pleased to report another year of operational and financial delivery against our five-year strategy to transform the business,” Imperial said. “At constant currency, we are on track to deliver in line with our full-year guidance with an acceleration in tobacco and next generation product (NGP) net revenue growth vs last year.”
Imperial said constant currency tobacco and NGP net revenue growth had “strengthened” over the same period last year due to strong pricing. NGP revenue is expected to grow 20%-30% at constant currency rates.
The business also said it had made gains in the US, Spain and Australia, broadly offsetting declines in Germany and the UK.
“Our results this year have benefited from the launch of innovative products with new formats under the blu brand, new iSenzia non-tobacco heat sticks and new flavours in the modern oral segment,” the firm said. “Our entry in the US oral nicotine category with the launch of the Zone range of pouches has been well received and supported a stronger NGP performance in our US business.”
Derren Nathan, head of equity research at Hargreaves Lansdown, said Imperial’s “narrowed focus” on core markets was helping it keep organic growth moving when larger rivals have been going in reverse.
“Imperial Brands is managing to drive growth not only in its fledgling next generation brands, but also in ‘legacy’ tobacco products which still make up the lion’s share of the business,” he said. In aggregate, tobacco volume pressures have eased across the company’s focus markets, and despite slowing price hikes for the pleasure of lighting up, pricing has been strong.”
The annual results for the year ended September 30, 2024, will be announced on November 19.