Pricing and Next Generation Products surge boost Imperial Brands revenue and profits

Imperial Brands has reported a robust performance for the fiscal year ending September 30, 2024, helped by strong cigarette prices and rise in its Next Generation Products (NGP) segment.

The group, whose brands include Golden Virginia tobacco, Rizla rolling papers, Winston cigarettes and the vaping brand blu, delivered a 4.6 per cent increase in tobacco and NGP net revenue on a constant currency basis. This was driven by strong pricing in the tobacco segment, which offset a 4 per cent decline in volume, and a remarkable 26.4 per cent rise in NGP revenue.

Group adjusted operating profit also grew by 4.6 per cent at constant currency to £3.9bn, reflecting operational resilience and strategic execution.

“As we enter the final year of our current strategy, the investment we have made in consumer capabilities, cultural transformation and agile ways of working has supported another year of accelerated financial delivery and growing capital returns,” Stefan Bomhard, chief executive, said.

In tobacco, the group has delivered aggregate market share gains across its five priority markets, with four out of five markets in share growth. In the UK, the company faced a 50 basis point decline in market share, which it attributed to high excise duties and a rise in illicit tobacco trade.

However, the company said, despite these challenges, the UK remains “an important value contributor.” Tobacco and NGP net revenue in the UK accounted for 7 per cent of the group's total, supported by strategic price increases. The NGP sales benefited from the successful roll-out of new products including the 1,000-puff blu bar disposable and the rechargeable blu bar kit, the company added.

NGP has emerged as a growth driver, with Imperial for the first time reporting increased revenue in all three regions.

In the Europe region, the company saw strong growth in vape, led by the UK and supported by new products including the 1,000-puff blu bar disposable and the rechargeable blu bar kit. The NGP net revenue in Europe now represents around 8 per cent of tobacco and NGP net revenue.

CEO Stefan Bomhard expressed confidence in delivering the final year of the group's current strategy, highlighting the transformation into a strong challenger in the tobacco and NGP sectors.

“Our operational delivery coupled with consistently strong cash flow generation has supported enhanced shareholder returns with increases to both our ordinary dividend and share buyback. We are on track to deliver five-year capital returns of c. £10bn, representing 67 per cent of our market capitalisation in January 2021 when we launched our strategy,” he said.

In the coming year, the company expects to deliver low single-digit tobacco and NGP net revenue growth and to grow the group adjusted operating profit close to the middle of our mid-single digit range, driven by continued profit growth from the combustible tobacco business and a further reduction in operating losses in the NGP portfolio.