For a company built on smoke, Imperial Brands LON:IMB is finally clearing the air. The cigarette maker says it remains on track to meet full-year guidance for 2025 and has announced a further £1.45bn share buyback for fiscal 2026 — a signal of confidence that will soothe investors still adjusting to a change in leadership.
Trading, the company insists, is “in line with guidance.” In tobacco, that means modest growth; in next-generation products (NGPs), it means another year of double-digit expansion. Market share gains in the US, Germany and Australia are expected to offset softer performance in Spain and the UK. Group adjusted operating profit should grow at roughly last year’s rate, with high single-digit adjusted earnings per share growth helped by the buyback’s reduction in share count.
A familiar story for Imperial Brands
For all the financial precision, this is a familiar story: the long decline of combustibles offset by pricing power and the slow rise of vaping and heated tobacco. Imperial has spent the past five years remaking itself into what it calls a “stronger challenger business” — leaner, more disciplined, and slightly less dependent on smokers lighting up. The final year of its 2021 transformation plan appears to be delivering on those modest ambitions.
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Pricing remains Imperial’s secret weapon. Volume declines are easing across most markets, and higher prices continue to more than compensate for lower consumption. Constant-currency revenue growth in tobacco and NGPs is expected in the low single digits, while NGP revenue growth should land around the midpoint of a 12–14 per cent range. NGP losses, crucially, are flat year on year — a quiet but important milestone for a division that once looked like a money pit.
Forex remains an irritant
Currency, as ever, is an irritant. The company expects a 2–3 per cent headwind from exchange translation to both revenue and profit. But cash conversion remains robust, and leverage is still near the lower end of Imperial’s 2.0–2.5 times target range. That balance-sheet discipline gives management room to keep investors sweet with buybacks and dividends.
The capital allocation story is, in many ways, the headline act. The dividend for FY25 has been raised 4.5 per cent to 160.32p, paid quarterly, and the “evergreen” buyback programme continues apace. The new £1.45bn buyback for FY26 takes total planned capital returns for the coming fiscal year above £2.7bn — roughly 11 per cent of Imperial’s market capitalisation.
From FY21 to FY25, shareholders have received nearly £10bn in combined dividends and repurchases. For income investors, that sort of reliability still matters more than the moral debate about nicotine.
Imperial Brands is inching towards efficiency
Operationally, the company is inching towards efficiency. A consultation is under way over the future of its Langenhagen factory in Germany, which may be sold or closed. It’s another sign of a group trimming the industrial baggage accumulated over decades.
As market analyst Mark Crouch of eToro put it, the fears that Imperial’s cash flows might “go up in smoke” have now “been all but extinguished.” Gains in key markets, resilient pricing, and continued progress in products like blu and Pulze show the strategy is finally holding together.
Investors once doubted whether Imperial could balance decline with reinvention. The share price’s recovery from May’s leadership wobble suggests that, for now, faith has been restored. Tobacco may be fading, but Imperial’s knack for turning ash into cash remains as potent as ever.
