Imperial Brands has launched a multi-year share buyback programme that aligns with its five-year strategy to deliver sustainable growth and enhanced shareholder returns.
The company described the move as the culmination of a two-year ‘strengthening’ phase in its plan, as it moves into the next three-year ‘improving returns’ phase.
Initially, the company plans to repurchase up to £1 billion of shares from 7 October 2022 to the end of September 2023, representing approximately 5.5% of the issued share capital of Imperial Brands based on market closure on 5 October 2022.
Over time, Imperial Brands aims to deliver a material reduction in the capital base, providing an ongoing source of shareholder returns in addition to its dividend policy.
An Important Milestone
Stefan Bomhard, Imperial Brands CEO, commented, "The launch of our new buyback programme is an important milestone in our five-year strategy announced in January 2021.
"Over the past two years, increased investment and a more consumer-centric approach have improved delivery in both our priority combustible markets and next generation product operations. Disciplined capital allocation has strengthened our balance sheet to reach our target leverage levels."
Imperial Brands noted that trading in its financial year 2022 has been in line with expectations, with targeted investment in its five largest combustible markets, which account for around 70% of operating profit, driving an improvement in aggregate market share.
The net revenue (at constant currency) in the tobacco segment increased in the second half of 2022 compared with the first half, driven by a strong price mix.
The recovery of international travel has, over the course of the year, led to a return to pre-COVID purchasing patterns leading to increased volume declines, particularly in Northern Europe, the company noted.
It was partly offset by volume growth in Southern Europe and duty free.
The company said it was on track to deliver against its five-year plan. It expects low single-digit constant currency net revenue growth over the next three years.
Adjusted operating profit (at constant currency) is forecast to accelerate to a mid-single digit CAGR over the next three years.
On 15 November, the company will announce its annual results for the year ended 30 September 2022.