Imperial Brands PLC (LSE:IMB) nudged up its dividend 4.5% as it reported profit recovery in the second half of the year, despite revenues coming in just below flat.
As it settles into its status as an income investor favourite, the tobacco and vaping group said it will move to four quarterly dividends in the coming year, while completing the last year of share buybacks under its last five-year plan, which has returned 67% of its starting market cap so far.
Revenue of £32.4 billion was down 0.2% versus the previous year, as tobacco volumes declined 4%, which was a reduction from the 6.3% decline in the first half, with the FTSE 100 company saying volumes were continuing to “normalise” across its markets.
Sales of its ‘next generation products’ (NGPs), including its Blu reusable vapes, Pulze heat-not-burn and nicotine pouches, rose 26.4% to £335 million.
Group adjusted operating profit grew 4.6%, driven by improved profitability in tobacco, NGP and its distribution arm, while reported operating profit grew 4.5% to £3.55 billion as adverse currency swings were offset by this year not containing the same legal provisions and impairments as last year.
Free cash flow of £2.4 billion fueled 153.4p per share total dividend and the ongoing share buyback that is “on track” to have delivered the promised five-year capital returns of almost £10 billion by the end of the 2025 financial year.
Chief executive Stefan Bomhard said management are working on the next phase of the five-year strategy and will present this at a capital markets day in March.
"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. These results demonstrate how we are fulfilling our role as an effective challenger for the industry, able to deliver consistently against operational and financial expectations.”