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.