REG - Imperial Brands PLC - Half-year Report

Imperial BrandsAnnouncement

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RNS Number : 5381I  Imperial Brands PLC  14 May 2025

IMPERIAL BRANDS PLC

Legal Entity Identifier (LEI) No. 549300DFVPOB67JL3A42

 

half YEAR RESULTS STATEMENT

14 may 2025

investing in Growth
Delivering RETURNS

 

Report for the six months ended 31 March 2025

Business Highlights

·    Aggregate market share gains (+6 bps) in our five priority markets -
ahead of our strategic objective

·    Strong tobacco pricing more than offsetting volume declines

·    NGP net revenue up 15.4% with growth in all categories; NGP reported
revenue up 14.7%

·    Strong tobacco result at Logista offset by performance in
long-distance transportation

·    Adjusted and reported earnings per share up 6.0% and 0.7%
respectively, driven by further share count reduction

·    12-month free cash flow of £2.4bn reflecting strong cash conversion
at 99% on 12-month basis

·    Capital returns underway: £1.25bn share buyback and increased
interim dividend

·    On track to deliver full-year results in line with guidance

On track to deliver full-year results in line with guidanceFinancial Summary

 Six months ended                       Reported                                         Adjusted(2)

31 March 2025
                                        2025      2024      Change    2025     2024      Actual  Constant currency(3)
 Revenue                           £m   14,604    15,064    -3.1%     -        -         -       -
 Tobacco & NGP net revenue(1)      £m   -         -         -         3,664    3,637     +0.7%   +3.2%
 Operating profit                  £m   1,456     1,494     -2.5%     1,652    1,669     -1.0%   +1.8%
 Earnings per share                p    96.7      96.0      +0.7%     123.9    120.2     +3.1%   +6.0%
 Net debt                          £m   (10,471)  (10,585)  -         (9,956)  (10,085)  -       -
 Dividend per share(4)             p    80.16     44.90     +78.5%    80.16    44.90     +78.5%  +78.5%

1.   Tobacco & NGP net revenue is reported revenue less duty and similar
items, sale of peripheral products and Distribution (Logista) gross profit.

2.   See page 3 for the basis of presentation and the supplementary section
at the end of the financial statements for the reconciliation between reported
and adjusted measures.

3.   Constant currency removes effect of exchange rate movements on the
translation of the results of our overseas operations.

4.   Dividend per share increase of 78.5%, or 35.26 pence, includes a 4.5%
underlying increase and an additional 33.24 pence from the rephasing of
dividend payments announced in October 2024.

Stefan Bomhard Chief Executive

"We have delivered another six months of broad-based constant currency growth
across all regions, demonstrating the strength of our distinctive challenger
approach and the benefit of long-term investments in our consumer
capabilities, sales execution and performance culture.

"In tobacco, we grew aggregate market share in our five priority markets by 6
basis points - ahead of our strategic objective to hold share. At the same
time, we delivered strong price mix of 5.9% across our overall combustible
footprint.

"In NGP, we increased market share and net revenue in all three categories to
support overall NGP net revenue growth of 15.4% and adjusted operating losses
reduced by 14.0%. Our modern oral portfolio has grown strongly across all
markets, including further share gains from the successful roll-out of Zone in
the USA.

"Our operational delivery is driving a consistent financial performance and
strong cash flows, which underpin both investment in growth initiatives and
enhanced capital returns to shareholders. This year, shareholders will benefit
from an accelerated cash payment as we rephase the dividend to four equal
instalments and from the ongoing £1.25 billion share buyback programme.

"Despite the uncertain global economic environment, we are on track to deliver
our full-year results in line with our guidance, supported by tobacco pricing
already taken in the first half and continued momentum in NGP.

"Looking beyond the current fiscal year, we remain committed to the plans and
medium-term guidance we provided in our 2030 strategy in March. These plans
set out the focused choices we will make to further strengthen our combustible
and NGP businesses and generate another five years of sustainable growth and
long-term shareholder value through a progressive dividend and an evergreen
share buyback."

 

Delivering Against our Strategic Priorities

Delivering priority market share gains alongside strong pricing

·    Aggregate market share up +6 bps in our five priority markets - ahead
of our strategic objective to maintain share

·    German market share gains means that our two largest markets are in
share growth, building on existing US performance

·    Gains in USA (+10 bps), Germany (+65 bps) and Australia (+5 bps)
offsetting declines in UK (-70 bps) and Spain (-90 bps)

·    Our focused investment in brand equity and sales force initiatives
are driving these share gains and strong pricing

·    Strong pricing supporting financial delivery while managing overall
market share delivery

Building a sustainable NGP business for a healthier future

·    Challenger approach is delivering growth in net revenue and market
share in all three categories

·    Strong growth in the Europe region and USA more than offsetting
temporary headwinds in AAACE region

·    Modern oral growing strongly driven by the roll-out of Zone in the
USA and product innovation in Europe

·    Vapour sales benefiting from roll-out of new formats to support
growth in key markets

·    Expanding our heated product offering for Pulze 2.0 with iSenzia
flavoured herbal sticks in Europe

Driving value from our broader market portfolio

·    Strong pricing in our wider footprint supported a resilient
performance

·    Good progress in broader geographies, e.g. Africa, Central and
Eastern Europe, Southeast Europe and Nordics

·    Driving growth through both combustible and NGP brands

Transforming our ways of working

·    Simplifying our operations with the go-live of a new ERP platform in
the UK as a priority market

·    Leveraging our consumer capabilities through investment in innovation
and brand equity aligned to consumer insights

·    Leadership coaching driving a focus on accountability and
collaboration to underpin our performance-based culture

·    As highlighted at our Capital Markets Day in March, we have
opportunities to strengthen all our strategic enablers

Results Overview*

Tobacco & NGP net revenue growth driven by resilient tobacco pricing

·    Tobacco and NGP net revenue up +3.2%

·    Strong tobacco pricing of +5.9% driven by a broad base of markets;
tobacco net revenue up +2.7%

·    Tobacco volumes down -3.2% (to 87.0bn SE) reflecting wider industry
market size declines across our footprint

·    NGP revenue up +15.4% as strong growth in the USA and Europe more
than offset declines in AAACE

·    Reported revenue declined -3.1%; reflecting volume declines in high
excise markets and adverse foreign exchange

Delivering improved profitability and increased investment

·    Group adjusted operating profit grew +1.8%, driven by improved
profitability in tobacco and lower losses in NGP

·    Reported operating profit declined -2.5% at actual rates reflecting
adverse foreign exchange translation

·    Tobacco adjusted operating profit increased 1.5%, driven by strong
pricing offsetting volume declines and increased investment; reported tobacco
operating profit down 1.8% at actual rates reflecting adverse foreign exchange

·    NGP adjusted losses reduced by 14.0% to £43m despite increased
investment in the roll-out of Zone in the USA; reported NGP operating losses
increased 14.8% at actual rates with higher amortisation of intangibles and
adverse foreign exchange

·    Distribution adjusted operating profit was flat as tobacco segment
growth offset weakness in long-distance transportation

·    Adjusted EPS up +6.0% with higher adjusted operating profit and
reduced share count more than offsetting higher tax rate

·    Reported EPS increased +0.7% at actual rates benefiting from the
reduced share count due to the ongoing share buyback and the lower finance
costs were offset by a higher tax charge

Free cash flow supporting investment and shareholder returns

·    Adjusted operating cash conversion of c. 99% on a 12-month basis

·    Adjusted net debt £10bn; adjusted net debt to EBITDA on a 12-month
basis improved 0.1x to 2.4x; reported net debt £10.5bn

·    On track to deliver adjusted net debt to EBITDA of around 2.0 times
at the year end

·    Interim dividend per share up 78.5% to 80.16 pence, reflecting
underlying growth of 4.5% and the rephasing of dividend to four equal
instalments

·    On track to grow FY25 dividend in line with underlying business
performance and our progressive dividend policy

·    Ongoing, multi-year evergreen buyback with £1.25bn underway this
year

·    Cumulative capital returns from FY21 to FY25 of c. £10bn,
representing c. 67% of market capitalisation at January 2021

*   All measures at constant currency unless otherwise stated

 

Outlook

 We are on track to meet the guidance and expectations for the full year
 despite a more uncertain global economic environment. At constant currency, we
 expect to deliver low-single digit growth tobacco and NGP net revenue and to
 grow Group adjusted operating profit close to the middle of our
 mid-single-digit range. Strong tobacco pricing already taken in the first half
 of the year and slightly lower NGP losses will support a stronger second half
 delivery. In NGP, we will continue to invest to drive another year of
 double-digit constant currency net revenue growth, while balancing our
 objective to build a sustainable and profitable business.

 The growth in adjusted operating profits is expected to translate into at
 least high-single-digit earnings per share growth at the full year at constant
 currency supported by the ongoing share buyback and partly offset by higher
 adjusted finance and tax costs. At current rates, foreign exchange translation
 is expected to be a headwind of 2.0-2.5% to net revenue and 3.5-4.5% headwind
 to adjusted operating profit and earnings per share.

 Looking beyond the current fiscal year, we remain committed to the plans and
 medium-term guidance we provided in our 2030 strategy in March. These plans
 set out the focused choices we will make to further strengthen our combustible
 and NGP businesses and generate another five years of sustainable growth and
 long-term shareholder value through a progressive dividend and an evergreen
 share buyback.

For a Copy of the full statement

To view  a copy of the full statement please click here:
www.imperialbrandsplc.com/HY25
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and it is also available
here: http://www.rns-pdf.londonstockexchange.com/rns/5381I_1-2025-5-13.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/5381I_1-2025-5-13.pdf)

Basis of Presentation

·    To aid understanding of our results, we use 'adjusted' (non-GAAP)
measures to provide a consistent comparison of performance from one period to
the next. Reconciliations between adjusted and reported (GAAP) measures and
further definitions of adjusted measures are provided in the supplementary
information section. Change at constant currency removes the effect of
exchange rate movements on the translation of the results of our overseas
operations. References in this document to percentage growth and increases or
decreases in our adjusted results are on a constant currency basis unless
stated otherwise. These are calculated by translating current year results at
prior year exchange rates.

·    Stick Equivalent (SE) volumes reflect our combined cigarette, fine
cut tobacco, cigar and snus volumes but exclude any NGP volume such as heated
tobacco, modern oral nicotine and vapour.

·    Market share is presented as a six-month average to the end of March
(MHT - moving half-year trend), unless otherwise stated. Aggregate market
share is a weighted average across markets within our footprint.

Other Information

 Investor Contacts                       Media Contacts
 Peter Durman       +44 (0)7970 328 903  Jonathan Oliver  +44 (0)7740 096 018
 John Crosse        +44 (0)7484 967 842  Simon Evans      +44 (0)7967 467 684
 Jennifer Ramsey    +44 (0)7974 615 739
 Henry Dodd         +44 (0)7941 648 421

Analyst Presentation Webcast

Stefan Bomhard, Chief Executive, and Lukas Paravicini, Chief Financial
Officer, will present the results to investors and analysts via a webcast at
09:00 (BST) on 14 May 2025. The presentation slides will be available from
07.00 (BST) on www.imperialbrandsplc.com. A webcast recording and presentation
script will be available after the webcast has concluded.

The webcast will be available on https://edge.media-server.com/mmc/p/ixugocgr
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. To participate in the Q&A session, please register in advance via this
link
https://register-conf.media-server.com/register/BI5ddc582c830e461cb14e55c9e5322ef9
(https://register-conf.media-server.com/register/BI5ddc582c830e461cb14e55c9e5322ef9)
. You will then receive the dial-in details and your own PIN to access the
live Q&A session.

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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