Market Data 
Investing.com — Shares of Imperial Brands (LON:) rose on Tuesday following the company’s pre-close trading update, which confirmed that it was on track to meet its full-year guidance while also increasing capital returns to shareholders for FY25.
At 4:43 am (0843 GMT), Imperial Brands was trading 3.9% higher at £2,231.
The tobacco giant flagged growth in both its traditional tobacco business and its next-generation products segment, with strong revenue performance and an uplift in operating profit.
“We are reassured by Imperial Brands’ in-line performance, with FY24 guidance being reiterated as expected, and increased shareholder return for FY25. Meanwhile, FX guidance is slightly more negative than consensus currently expects,” said analysts at RBC Capital Markets in a note.
The company’s trading update, ahead of its full-year results set to be announced in November, reassured investors that it continues to deliver on its five-year transformation strategy.
Imperial Brands reported stable aggregate market share in its five priority markets, which include the U.S., Spain, and Australia, with solid pricing strength offsetting volume pressures.
Additionally, gains in those markets have compensated for declines in Germany and the UK, helping the company maintain its market position.
Imperial Brands also saw a marked improvement in its NGP segment, with net revenue expected to grow between 20-30% at constant currency.
The company has been investing in innovative products such as new formats under its blu brand, the iSenzia non-tobacco heat sticks, and new flavors in its modern oral offerings.
Additionally, the launch of the Zone oral nicotine pouches in the U.S. has been well-received, supporting the company’s efforts to expand in this category.
A key takeaway for shareholders was the announcement of increased capital returns for FY25. Imperial Brands revealed plans for a £1.25 billion share buyback, representing a 13.6% increase compared to the prior year, and roughly 7% of its current share capital.
This, along with a planned dividend payout of £1.5 billion, reflects the company’s confidence in its financial performance and its commitment to boosting shareholder returns.
The dividend has also been increased by 4.5% to 153.43 pence per share.
Another shift is the move to a quarterly dividend payment structure starting in FY26. In FY25, to establish this new schedule, Imperial will issue two interim dividends of 40.08 pence per share in June and September, offering a smoother cash flow to investors.
This change, the company explained, will help reduce leverage fluctuations throughout the year.
Imperial Brands’ update also flagged that its adjusted operating profit had improved in the second half of the fiscal year, bolstered by strong results across all regions. This included a recovery in the AAACE region, where shipment timings had weighed on the first half of the year.
The company continues to benefit from its 50.01% stake in the Spanish-based distribution business Logista, which has contributed to its profit growth.
Despite these positives, the company flagged a slight headwind from foreign exchange rates, with a 2.5-3.0% impact on full-year tobacco and NGP net revenue and a 4.0% effect on adjusted operating profit.
Nevertheless, its overall performance remains strong, with adjusted operating cash conversion remaining robust, and leverage expected to remain at the lower end of the company’s 2.0-2.5 range for net debt to EBITDA.
