Imperial Brands takes wraps off new long-term strategy, 'evergreen' buyback

(Sharecast News) - Imperial Brands unveiled a new long-term growth strategy to 2030 on Wednesday, building on its current five-year plan with a focus on delivering sustainable value in combustibles, scaling its next generation products (NGP) business, and driving efficiencies through a more agile, data-led organisation. The London-listed tobacco giant also announced the introduction of a rolling annual share buyback programme set to run through to the 2030 financial year.

It said the new strategy was centred on two core objectives - maintaining and growing value in its five priority combustible markets - the US, Germany, UK, Spain and Australia - which currently account for around 70% of adjusted tobacco operating profit, and expanding its NGP business, where it aimed to deliver double-digit revenue growth supported by consumer insights, product innovation, and broader distribution.

Imperial said it was planning to back the goals with investment in brand capabilities, leadership development, and a simplified global structure.

It expected the initiatives to yield £320m in annual savings by 2030, with the majority of the anticipated £600m cash costs concentrated in the 2027 and 2028 financial years.

A further £140m in related non-cash charges would be treated as adjusting items.

Financial targets under the strategy included constant currency annual growth of 3% to 5% in adjusted operating profit, high-single-digit growth in adjusted earnings per share, and free cash flow generation of between £2.2bn and £3bn per annum.

Capital allocation priorities remained unchanged, with a continued focus on investment, maintaining a strong balance sheet, progressive dividends, and surplus capital returns.

To support shareholder returns, Imperial announced an 'evergreen' share buyback running from the 2026 to 2030 financial years, with the scale of annual repurchases to be determined each year by the board.

The firm said it was on track to meet 2025 guidance.

For the full year, it expected low single-digit growth in tobacco and NGP net revenue, mid-single-digit growth in adjusted operating profit, and high-single-digit growth in adjusted earnings per share, supported by the ongoing buyback.

NGP revenue was forecast to grow by 10% to 15% for the year.

First-half performance would be more modest due to investment phasing and foreign exchange headwinds, with second-half delivery expected to drive full-year results.

"Our 2030 strategy articulates the choices we will make to further strengthen our combustible and next generation product (NGP) businesses, generating sustainable growth and long-term value for shareholders," said chief executive officer Stefan Bomhard.

"This strategy builds on the firm foundations of our current plan, which has created a better business delivering a stronger, more consistent operational and financial performance, and excellent returns for shareholders.

"This underpins my confidence that, during the next five years, we will unlock further value creation opportunities."

Bomhard said the company would maintain its "distinctive challenger approach", which he said was about developing a deep understanding of consumers, equipping itself to perform with agility, and choosing to focus on its biggest levers of growth.

"We will continue to upgrade our capabilities, creating differentiated brands, a high-performance culture and a more efficient organisation led by data.

"This will support growth in combustibles, where we will continue to focus on the five largest markets accounting for 70% of adjusted operating profit, and NGP, where we will retain our disciplined investment and market entry criteria.

"We are maintaining our rigorous capital allocation framework, which has both supported investment in growth and delivered substantial, growing capital returns for shareholders."

Imperial was "committed" to a progressive dividend per share, Stefan Bomhard added, alongside its announcement of an 'evergreen' share buyback each year over the next five years.

"We believe this combination of sustainable growth and capital returns reinforces a compelling investment case for shareholders."

At 1440 GMT, shares in Imperial Brands were down 1.06% at 2,710p.

Reporting by Josh White for Sharecast.com.