REG - Imperial Brands PLC - Pre-close trading update

Imperial BrandsAnnouncement

09/04/2024 07:00

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RNS Number : 7586J  Imperial Brands PLC  09 April 2024

IMPERIAL BRANDS PLC

 

Legal Entity Identifier (LEI) No. 549300DFVPOB67JL3A42

 

9 April 2024

 

Pre-close trading update: Imperial Brands on track to meet half-year and
full-year guidance

 

·      Strong tobacco pricing supporting financial delivery while
balancing share performance

·      Maintaining stable aggregate share in our top-five combustible
markets in line with our objective

·      Next Generation Product (NGP) net revenue growth as we build
scale and launch new products

·      First-half adjusted Group operating profit ahead of H1 2023 on
constant currency basis, reflecting higher tobacco and NGP adjusted operating
profit and growth at Logista

·      Confident of meeting full-year expectations and our guidance of
growing net revenue and delivering a step-up in adjusted operating profit
growth

·      Cash conversion improved on last year and in line with guidance

·      On track to deliver the £1.1bn buyback programme, as part of
ongoing programme of capital returns

 

We continue to make good progress implementing our five-year strategy to
transform the business and we remain confident we will deliver the full-year
accelerated adjusted operating profit growth in line with our previously
stated medium-term guidance. For the full-year, on a constant currency basis,
tobacco and NGP net revenue is expected to grow at a low single-digit rate,
with Group adjusted operating profit growing at a rate close to the middle of
our mid-single digit range. This performance reflects our improved resilience
to withstand geopolitical and macro-economic pressures as well as the benefit
of our continued investment to strengthen performance and drive
transformation.

 

Constant currency tobacco and NGP net revenue growth has strengthened over the
same period last year underpinned by strong combustibles pricing and growth in
our NGP business. In combustibles, focused investment in our five priority
markets continues to support resilient aggregate market share with gains in
the US, Spain and Australia, broadly offsetting declines in Germany and the
UK, as expected. These results are consistent with our medium-term objective
to hold or grow aggregate share across these markets. At the same time, we
have delivered strong pricing, more than offsetting wider industry volume
pressures in certain markets.

 

NGP first half net revenues are expected to grow in the mid- to high-teens at
constant currency, as we build scale in our existing footprint.  We are now
present in more than 20 European markets and the US, and, in the first half,
we launched innovative products in all three categories. These included new
single-use formats under the blu brand, new iSenzia non-tobacco heat sticks,
and entry in the US oral nicotine category with the Zone range of pouches.

 

As previously guided, growth in first-half Group adjusted operating profit is
expected to be at low single digits on a constant currency basis, reflecting
the anticipated second-half weighting of performance. In the first-half,
constant currency tobacco adjusted operating profit will be ahead of last year
with good performances in Europe and Americas more than offsetting a softer
performance in the AAACE region, which benefited from a very strong comparator
period. We are improving our NGP gross margins as we build scale and are
reducing NGP operating losses alongside continued investment in line with our
plans. First-half Group adjusted operating profit has also benefited from
growth in Distribution, reflecting performance at Logista, the Spanish-based
distribution business in which we have a 50.1% stake.

 

Our second half delivery will be underpinned by embedded tobacco pricing
already taken in the first half and further NGP growth as we build scale, and
their associated margin benefits.

 

At current exchange rates, translation foreign exchange is expected to be a c.
5 per cent headwind on first-half adjusted operating profit and a c. 3.5 per
cent headwind on full-year adjusted operating profit.

 

Our adjusted operating cash conversion remains strong on a 12-month basis and
we are on track to deliver in line with our guidance at the half and full
year. We expect our full-year leverage to remain at the lower end of our
2.0-2.5 range for net debt to EBITDA.

 

At 31 March 2024, we had completed £604m of our £1.1bn share buyback for
this year, representing approximately 3.7% of the share capital as at 1
October 2023. The buyback is on track to complete no later than 29 October. We
remain committed to delivering a material reduction in the share capital base
over time. This buyback programme represents an ongoing source of shareholder
returns alongside our progressive dividend policy.

 

The interim results for the six months ended 31 March 2024 will be announced
on 15 May 2024.

 

ENDS

 

Notes:

The Group uses 'adjusted' (non-GAAP) measures as we believe they provide a
better comparison between reporting periods. The definition of our adjusted
measures is unchanged from our full-year results. We also use the term
'constant currency', which removes the effect of exchange rate movements on
the translation of the results of our overseas operations.

 

 

 Investor Contacts                     Media Contacts
 Peter Durman     +44 (0)7970 328 903  Jonathan Oliver  +44 (0)7740 096 018
 Jennifer Ramsey  +44 (0)7974 615 739  Simon Evans      +44 (0)7967 467 684
 Henry Dodd       +44 (0)7941 648 421

 

Cautionary Statement

Certain statements in this announcement constitute or may constitute
forward-looking statements. Any statement in this announcement that is not a
statement of historical fact including, without limitation, those regarding
the Company's future expectations, operations, financial performance,
financial condition and business is or may be a forward-looking statement.
Such forward-looking statements are subject to risks and uncertainties that
may cause actual results to differ materially from those projected or implied
in any forward-looking statement. These risks and uncertainties include, among
other factors, changing economic, financial, business or other market
conditions. These and other factors could adversely affect the outcome and
financial effects of the plans and events described in this announcement. As a
result, you are cautioned not to place any reliance on such forward-looking
statements. The forward-looking statements reflect knowledge and information
available at the date of this announcement and the Company undertakes no
obligation to update its view of such risks and uncertainties or to update the
forward-looking statements contained herein. Nothing in this announcement
should be construed as a profit forecast or profit estimate and no statement
in this announcement should be interpreted to mean that the future earnings
per share of the Company for current or future financial years will
necessarily match or exceed the historical or published earnings per share of
the Company. This announcement has been prepared for, and only for the members
of the Company, as a body, and no other persons. The Company, its Directors,
employees, agents or advisers do not accept or assume responsibility to any
other person to whom this announcement is shown or into whose hands it may
come and any such responsibility or liability is expressly disclaimed.

 

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