TIDMIMB
RNS Number : 7432O
Imperial Brands PLC
05 October 2023
IMPERIAL BRANDS PLC
Legal Entity Identifier (LEI) No. 549300DFVPOB67JL3A42
5 October 2023
Imperial Brands on track to deliver full-year guidance and
announces further GBP1.1bn share buyback
-- FY23 trading in line with guidance, with growth in aggregate
market share of top-five priority markets
-- Strong tobacco pricing driving constant currency net revenue
and adjusted operating profit growth
-- Momentum building behind next generation product (NGP) net
revenue growth across all categories
-- Further GBP1.1bn share buyback announced for FY24, a 10%
increase on the GBP1.0bn buyback in FY23
-- Total capital returns in FY24, including ordinary dividends
and share buyback, expected to exceed GBP2.4bn
Pre-close trading update
The implementation of our five-year strategy is driving further
improvements in operational and financial performance, and we are
on track to deliver in line with our previous full-year guidance.
On a constant currency basis and including Russia in the prior-year
comparator, tobacco and NGP net revenue is expected to grow in the
low single digits and Group adjusted operating profit growth to
accelerate to the lower end of our mid-single digit range. At
current rates, we expect foreign exchange to be a c. 2% tailwind to
full-year net revenue and adjusted operating profit.
Focused investment in our priority combustible markets is
expected to deliver a further modest gain in the aggregate share
for our top-five markets at the full year. This will complete three
consecutive years of improved market share performance following
several years of decline. Like the first half, the US, Spain and
Australia are expected to show market share growth, more than
offsetting declines in Germany and the UK. This positive aggregate
share performance has been achieved while delivering strong pricing
across all five markets, and reflects the strengthened equity of
our brands and our improved resilience as a result of our recent
targeted investments.
As anticipated, at constant currency our tobacco net revenue
growth improved in the second half of the year, as continued strong
pricing helped to offset the relatively higher volume declines
against historic averages. Tobacco net revenue growth has remained
strong in Europe and the AAACE region, more than offsetting
declines in the US. Our US cigarette business has outperformed with
continued growth in cigarette net revenue although, as expected,
this has been more than offset by a decline in mass market cigar
net revenue against a strong comparator period. This headwind,
which we reported at the half-year, has eased during the second
half. Excluding Russia, our tobacco net revenue at full year is
anticipated to be ahead of last year on a constant currency basis.
Details of the contribution from Russia last year are provided at
the end of this statement.
Full-year NGP revenue growth has accelerated in the second half
of the year, driven by strong growth in Europe. In all categories
of next generation products - vape, heated tobacco and oral
nicotine - we delivered a step-up in product and market launches
during the year. In the US, we welcomed the unanimous decision on
29 August 2023 by United States Court of Appeals for the District
of Columbia Circuit to vacate the Food and Drug Administration's
Marketing Denial Order for our myblu pod-based vapour product, and
we are on track to launch our new modern oral product early in
2024.
As previously signalled, over the period FY23 to FY25, we expect
operating profit to accelerate to a mid-single-digit CAGR at
constant currency.
Consistent capital allocation supporting shareholder returns
We expect net debt to EBITDA leverage at 30 September 2023 to be
at around 2.0 times. We plan to maintain this level of gearing
going forward and reiterate our commitment to our investment grade
credit rating.
In line with our capital allocation policy and reflecting our
confidence in our strategy and cash generation, we are today
announcing a further buyback of up to GBP1.1 billion of shares in
the period from 6 October 2023 to the end of September 2024. This
represents almost 8% of our share capital based on yesterday's
market closing share price. This is a 10% increase on last year's
GBP1 billion buyback, where we repurchased 52,107,043 shares, or
5.5%, of our share capital in FY23.
This commitment forms part of an ongoing, multi-year buyback
programme that will deliver a material reduction in the capital
base over time, which, together with our progressive dividend
policy, will provide an ongoing source of shareholder returns.
Taking our dividends and buyback together, we expect our capital
returns to shareholders will exceed GBP2.4 billion in the coming
fiscal year, representing around 17% of our current market
capitalisation.
The full year results for the twelve months ended 30 September
2023 will be announced on 14 November 2023.
Impact of Russia Exit
On 20 April 2022, we announced the transfer of our Russian
business to local investors. We provide below the contribution from
our Russian business in FY22 for key metrics to assist with the
modelling the year-on-year impact.
FY22 Russia contribution Russia
-------------------------- ------- -------
Tobacco volume bn SE 7.8
-------------------------- ------- -------
Total net revenue GBPm 56
-------------------------- ------- -------
Tobacco net revenue GBPm 56
-------------------------- ------- -------
NGP net revenue GBPm -
-------------------------- ------- -------
Adjusted operating
profit GBPm 5
-------------------------- ------- -------
Central & Eastern Europe transferred to AAA to support wider
market portfolio initiatives
In April 2023, we announced the transfer of the management of
our Central and Eastern Europe cluster from our Europe region to
the Africa, Asia and Australasia (AAA) region. The AAA region is
now known as AAACE. The affected markets are Poland, Czech
Republic, Ukraine, Slovakia, Hungary, Azerbaijan, Armenia, Georgia,
Moldova, Croatia and Slovenia. The Americas region is unaffected by
the change.
As a reminder, we provide below the key regional metrics for
FY22 restated for the new reporting basis.
FY22 restatement Europe AAA (existing) CEE Europe AAACE
(existing) (new) (new)
------------------------- ------- ------------ --------------- ----- ------- -------
Tobacco volume bn SE 121.5 77.5 23.6 97.9 101.1
------------------------- ------- ------------ --------------- ----- ------- -------
Total net revenue GBPm 3,472 1,495 433 3,039 1,928
------------------------- ------- ------------ --------------- ----- ------- -------
Tobacco net revenue GBPm 3,306 1,495 423 2,883 1,918
------------------------- ------- ------------ --------------- ----- ------- -------
NGP net revenue GBPm 166 0 10 156 10
------------------------- ------- ------------ --------------- ----- ------- -------
Adjusted operating
profit GBPm 1,562 700 115 1,447 815
------------------------- ------- ------------ --------------- ----- ------- -------
S
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
+44 (0)7970 328 +44 ( 0)7740 096
Peter Durman 903 Jonathan Oliver 018
+44 (0)7974 615 +44 (0)7967 467
Jennifer Ramsey 739 Simon Evans 684
+44 (0)7941 648
Henry Dodd 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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END
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October 05, 2023 02:00 ET (06:00 GMT)
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