The maker of Winston cigarettes, Backwoods cigars and Golden Virginia rolling tobacco reported an adjusted operating profit of £3.89 billion (€4.47 billion) for the year ended September 30, up from £3.69 billion.
The company said its strong financial performance, three years into a five-year strategy anchored on winning back market share in five key tobacco markets, gave it confidence it could increase its adjusted operating profit by mid-single digits next year and beyond.
In a statement, the company said that it looks forward 'to building on our growing operational track record to deliver sustainable returns to shareholders'.
Imperial Brands said next year it anticipates low-single-digit revenue growth, while it expects adjusted operating profit close to the middle of its mid-single digit range.
However, it said performance will be weighted to the second half of the year due to pricing actions and investments in smoking alternatives, such as vapes.
This means adjusted operating profit will likely grow by low single digits in the first half, it continued.
"Looking ahead, we expect the continuing benefits of our transformation to enable a further acceleration in our adjusted operating profit growth in the final two years of our five-year strategy," commented Stefan Bomhard, chief executive.
"We look forward to building on our growing operational track record to deliver sustainable returns to shareholders and play a positive, distinctive role in this industry’s transition to a healthier future.”
Imperial said an 11% rise in tobacco prices had helped offset volume declines across all of Imperial's key markets.
While its division selling smoking alternatives saw a 26.4% increase in revenue, adjusted losses increased by more than 48% to £135 million (€155 million) due to new product and market launches, which drove higher investment costs.
Imperial raised its annual dividend by 4%, and said its ongoing multi-year share buyback would increase 10% in 2024.
Commenting on Imperial Brands' performance, analyst Russ Mould of AJ Bell said, “Amid strengthening political and regulatory headwinds, one might think the tobacco and vaping industry is struggling. Imperial Brands’ results would suggest otherwise, as profits and dividends are growing.
“While the industry might have over-estimated the speed by which smokers transition to vaping and other next-generation products, when you add up sales across the board companies like Imperial Brands are still making big money.
“Parts of the market remain doubtful, nonetheless. When you have headlines about governments in different countries clamping down on smoking and trying to stop young people from vaping, it’s no wonder that sentiment remains poor towards shares in the sector.
“Consumers are increasingly paying more attention to health and wellness and owning shares in this sector may not sit well with their moral conscience. But there will be others who see the opportunity to buy growing companies on cheap valuations. At the moment the balance seems to be in favour of the former.”
Additional reporting by ESM