REG - Imperial Brands PLC - Trading Statement

Imperial BrandsAnnouncement

08/10/2024 07:00

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RNS Number : 2612H  Imperial Brands PLC  08 October 2024

IMPERIAL BRANDS PLC

 

Legal Entity Identifier (LEI) No. 549300DFVPOB67JL3A42

 

8 October 2024

 

Imperial Brands confirms trading in line with expectations and increases
shareholder returns for FY25

 

FY24 pre-close trading update

·      Trading in line with expectations with further growth in both
tobacco and NGP

·      Maintaining stable aggregate market share in five priority
markets while delivering strong pricing

·      Strong growth in NGP net revenues with a further reduction in
operating losses

·      Group adjusted operating profit growth in line with guidance

·      Adjusted EPS accelerating, driven by constant currency adjusted
operating profit growth and share count reduction from the ongoing buyback

·      FY24 annual dividend increased by 4.5% to 153.43 pence per share

FY25 capital returns to shareholders

·      Increased returns in FY25 of c. £2.8 billion (vs £2.4 billion
commitment in FY24), comprising:

o  Share buyback of £1.25 billion, a 13.6% increase

o  Cash dividends of c. £1.5 billion payable in FY25 as part of a move to
four equal quarterly dividend payments in the future

Pre-close trading update

We are pleased to report another year of operational and financial delivery
against our five-year strategy to transform the business. At constant
currency, we are on track to deliver in line with our full-year guidance with
an acceleration in tobacco and NGP net revenue growth vs last year and Group
adjusted operating profit growth close to the middle of our mid-single digit
range.

 

Constant currency tobacco and NGP net revenue growth has strengthened over the
same period last year underpinned by strong combustibles pricing and further
growth in our NGP business. Our investment activities in our five priority
markets continue to deliver stable aggregate market share with gains in the
US, Spain and Australia, broadly offsetting declines in Germany and the UK.
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, while industry volume pressures have eased across the majority
of our wider market footprint.

 

NGP net revenue is expected to grow in the range of 20-30% at constant
currency, with increases across all three regions as we build scale in our
existing footprint. 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. 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.

 

As expected, our constant currency Group adjusted operating profit growth
improved in the second half of the year driven by strong results across all
three regions, including the AAACE region where shipment timings in the Middle
East affecting the first half have now been resolved. Our profit performance
also reflects reduced NGP operating losses as we build scale while continuing
to invest in line with our plans. Group adjusted operating profit has
benefited from growth at Logista, the Spanish-based distribution business in
which we have a 50.01% stake.

 

At current exchange rates, translation foreign exchange is expected to be a c.
2.5-3.0% headwind on full-year tobacco and NGP net revenue and a c. 4.0%
headwind on full-year Group adjusted operating profit and earnings per share.
The average number of shares for the year was 869.0 million shares.

 

Our adjusted operating cash conversion remains strong and we expect our
full-year leverage to remain at the lower end of our 2.0-2.5 range for
adjusted net debt to EBITDA.

 

The annual results for the year ended 30 September 2024 will be announced on
19 November 2024.

 

Delivering increased shareholder returns in FY25

In line with our five-year strategy to deliver sustainable growth and enhanced
shareholder returns, Imperial Brands today announces an increased share
buyback for FY25 and a plan to reprofile our ordinary dividend to four equal
quarterly dividend payments, which will temporarily accelerate dividend cash
payments of approximately £270m in FY25.

 

As part of our commitment to an ongoing multi-year buyback, we are announcing
a further £1.25 billion share buyback, which we expect to complete no later
than 29 October 2025. This represents approximately 7% of the current share
capital and is a 13.6% increase on the FY24 share buyback of £1.1 billion.
As a result, our strategy is on track to deliver total share buyback returns
of £3.35 billion since we started the buyback programme in FY22.

 

For FY24, we are today announcing a total annual dividend of 153.43 pence per
share, which represents an increase of 4.5% on the prior financial year in
line with the Group's progressive dividend policy. This will result in two
quarterly dividends of 54.26 pence per share to be paid in December 2024 and
March 2025.

 

We are also announcing today a change to the future dividend payment profile
to four equal quarterly dividend payments for FY26 onwards. This smoothing of
the dividend payment profile will result in more consistent cash returns to
shareholders throughout the year, compared to the current 30:70 split. This is
enabled by the strong visibility of cash flows from our portfolio following
the successful execution of our strategy. The change will also help to reduce
our leverage variance within the year, particularly around the half year,
which is partly a result of the current dividend phasing.

 

To create the base for future quarterly payments, we intend to pay two interim
cash dividends of 40.08 pence per share in June and September 2025. These
payments will be higher than would otherwise have been the case and also
include a further 4.5% year-on-year increase. A schedule of the proposed
dividend cash payments for FY25 is provided in the notes to this release.

 

Today's announcement is consistent with our capital allocation priorities of
returning surplus capital to shareholders after continued investment in the
business to support our strategy and maintaining a strong and efficient
balance sheet with a target leverage at the lower end of our net debt to
EBITDA range of 2.0-2.5 times.

 

 

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.

 

As a result of the move to equal quarterly dividend payments over the next
year, we provide the following schedules for dividend payments for FY24 and
FY25.

 

 FY24 Dividend Schedule

                 Pence per share  Ex-date    Record date  Payment date
 First interim   22.45            23-May-24  24-May-24    28-Jun-24
 Second interim  22.45            22-Aug-24  23-Aug-24    30-Sep-24
 Third interim   54.26            28-Nov-24  29-Nov-24    31-Dec-24
 Final proposed  54.26            20-Feb-25  21-Feb-25    31-Mar-25
 Total dividend  153.43

 

 Cash dividend payments in FY25                      For reference cash dividends in FY24
                      Payment date  Pence per share  Payment date         Pence per share
 Third FY24 interim   31-Dec-24     54.26            31-Dec-23            51.82
 Final FY24 proposed  31-Mar-25     54.26            31-Mar-24            51.82
 First FY25 interim   30-Jun-25     40.08            28-Jun-24            22.45
 Second FY25 interim  30-Sep-25     40.08            30-Sep-24            22.45
 Total cash dividend                188.68                                148.54

 

The quarterly interim dividend of 40.08 pence per share will form the basis
for future quarterly dividends to be paid in FY26.

 

 

 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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