TIDMIMB
RNS Number : 9544B
Imperial Brands PLC
06 October 2022
IMPERIAL BRANDS PLC
Legal Entity Identifier (LEI) No. 549300DFVPOB67JL3A42
6 October 2022
Imperial Brands announces share buyback programme and affirms
trading in line with expectations
-- Strengthened balance sheet and achievement of target leverage
enable immediate start of an ongoing share buyback programme
-- GBP1 billion of shares to be repurchased in first 12 months to return surplus capital
-- Total capital returns in FY23, including ordinary dividends
and share buybacks, expected to exceed GBP2.3 billion, representing
c. 13% of current market capitalisation
-- FY22 trading in line with expectations with growth in
aggregate market share for top-five priority markets
-- Good progress with our next generation product launches supports further market roll-outs
In line with its five-year strategy to deliver sustainable
growth and enhanced shareholder returns, Imperial Brands today
announces the start of an ongoing, multi-year share buyback
programme. This is the culmination of the two-year 'strengthening'
phase of our plan, as we move into the next three-year 'improving
returns' phase.
We intend initially to repurchase up to GBP1 billion of shares
in the period from 7 October 2022 to the end of September 2023.
This would represent approximately 5.5% of the issued share capital
of Imperial Brands based on yesterday's market close. Over time, we
intend to deliver a material reduction in the capital base,
providing an ongoing source of shareholder returns in addition to
our progressive dividend policy.
Stefan Bomhard, Imperial Brands CEO, said: "The launch of our
new buyback programme is an important milestone in our five-year
strategy announced in January 2021. Over the past two years,
increased investment and a more consumer-centric approach have
improved delivery in both our priority combustible markets and next
generation product operations. Disciplined capital allocation has
strengthened our balance sheet to reach our target leverage
levels.
"Today's announcement is underpinned by this improving
performance and our confidence in being able to continue generating
strong cash flows to support growing shareholder returns in the
years to come. We are committed to a progressive dividend and an
ongoing buyback programme to meaningfully reduce the capital base
over time."
FY22 trading performance
Trading in the year has been in line with expectations. Targeted
investment in our five largest combustible markets which account
for around 70% of operating profit has driven an improvement in
aggregate market share. At constant currency, the growth rate of
our tobacco net revenue improved in the second half compared with
the first, driven by a stronger price mix. As expected, the
recovery of international travel has, over the course of the year,
led to a return to pre-COVID purchasing patterns. This has led to
increased volume declines, particularly in Northern Europe, partly
offset by volume growth in Southern Europe and Duty Free.
We continue to make good progress in implementing our refreshed
NGP strategy. Further share gains have been made with Pulze and iD,
our heated tobacco offering, in Greece and the Czech Republic, and
in the past month we launched in Italy, Europe's largest heated
tobacco market. Our consumer trial of blu 2.0, a new pod-based
vapour device, in selected cities in France has been well received
by consumers and the trade.
In line with previous guidance, we expect full-year net revenue
and Group adjusted operating profit to both grow by around 1 per
cent at constant currency. At current exchange rates, translation
foreign exchange is expected to be a c. 1 per cent tailwind on
full-year net revenue and a c. 2 per cent tailwind on full-year
adjusted earnings per share.
Looking ahead, we remain on track to deliver against our
five-year plan. The additional investment and the actions we have
taken during the initial two-year strengthening phase have built
strong foundations and enhanced our resilience as we face a more
challenging macro-economic environment. Over the next three-year
phase of our plan, we continue to expect low single-digit constant
currency net revenue growth with constant currency adjusted
operating profit growth accelerating to deliver a mid-single digit
CAGR over the three years.
Delivering on our capital allocation priorities
Our five-year strategic plan is supported by a clear capital
allocation policy with four priorities:
1. Invest behind the new strategy to deliver the growth initiatives.
2. Deleverage to support a strong and efficient balance sheet
with a target leverage towards the lower end of our net debt to
EBITDA range of 2.0-2.5 times.
3. A progressive dividend policy with the dividend growing
annually, taking into account underlying business performance.
4. Surplus capital returns to shareholders once target leverage has been achieved.
At the end of our financial year to 30 September 2022, our
leverage was at the lower end of our net debt to EBITDA range of
2.0-2.5 times. We expect to maintain this level of gearing going
forward and we reiterate our commitment to our investment grade
credit rating. The strengthened balance sheet position means we are
now in a position to start to return surplus capital to
shareholders.
Meanwhile, we will continue to invest behind growth
opportunities in our combustible and NGP businesses in line with
our strategic plan, with an expected level of capital expenditure
for the Group of around GBP300 million to GBP350 million per
annum.
The annual results for the year ended 30 September 2022 will be
announced on 15 November 2022.
ENDS
Notes:
This announcement contains inside information.
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
+44 (0)7970 328 +44 ( 0)7740 096
Peter Durman 903 Jonathan Oliver 018
+44 (0)7581 052 +44 (0)7967 467
James King 880 Simon Evans 684
+44 (0)7974 615
Jennifer Ramsey 739
Investor/analyst Conference Call
Chief Executive Stefan Bomhard and Chief Financial Officer Lukas
Paravicini will be hosting a telephone conference call for
investors and analysts at 09:00 BST on Thursday 6 October. If you
wish to participate in the call, please register in advance using
the following link:
https://register.vevent.com/register/BIed4ccd2b1b464f909ff737e881a2d4b4
You will be sent dial-in details and your own PIN to access the
call.
A recording and transcript will be made available after the call
on www.imperialbrandsplc.com .
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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END
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October 06, 2022 02:00 ET (06:00 GMT)
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