Imperial Brands maintains FY26 guidance after mixed first half

Imperial Brands plc (LON:IMB) has announced its report for the six months ended 31st March 2026.

Performing and transforming

Improving cash and returns

BUSINESS HIGHLIGHTS*

·      Tobacco net revenue growth of 1.5% supported by robust tobacco pricing, more than offsetting volume declines

·      NGP net revenue up 7.5%, with double-digit growth in AAACE (60.0%) and Europe (15.3%), with market share growth in all three NGP categories

·      Tobacco & NGP net revenue up 1.8%; reported revenue up 0.8%

·      Adjusted operating profit 0.6% higher year-on-year, led by Europe; reported operating profit down 36.5%, reflecting costs of Delaware settlement and 2030 Strategy activities

·      Distribution adjusted operating profit down -3.0%, reflecting lower tobacco profits; reported operating profit down -5.0%

·      Adjusted earnings per share up 5.3% driven by adjusted operating profit growth and share count reduction; reported earnings per share down -38.1%, largely driven by reduction in operating profit

·      12-month free cash flow £2.6bn reflecting strong cash conversion of 98% on 12-month basis

·      Capital returns: £809m share buyback completed in period; interim dividend increased by 4.0%

·      On track to deliver full year results in line with guidance

·      Strong start to transformation; on track to deliver £320m of cost savings per annum by 2030 and to becoming a more consumer-focused, data-led, agile and efficient challenger; strategic partnership with Capgemini

*    All measures at constant currency unless otherwise stated.

Financial summary

1.   Tobacco & NGP net revenue is reported revenue less duty and similar items, sale of peripheral products and Distribution (Logista) gross profit.

2.   See page 3 for the basis of presentation and the supplementary section at the end of the financial statements for the reconciliation between reported and adjusted measures.

3.   Constant currency removes effect of exchange rate movements on the translation of the results of our overseas operations.

Lukas Paravicini, Imperial Brands Chief Executive

“We have made a positive start to the execution of our evolved 2030 Strategy, combining consistent operational and financial performance with tangible progress on our transformation.

In combustibles, robust pricing momentum has continued to deliver low single-digit growth, at constant currency, in both net revenue and adjusted operating profit. In next generation products we continue to grow market share in all three categories. We have seen particularly strong growth in heated tobacco, following the rollout of our Pulze 3.0 device. Our modern oral portfolio has grown strongly in European markets, while in the US we have grown volume share in a competitive market.

Despite the impact of one-offs our first half operational performance has driven consistent, strong cash flows, which underpin ongoing investment in growth initiatives and capital returns to shareholders. We are on track with our £1.45bn share buyback and the interim dividend has been increased by 4%.

While staying laser-focused on in-year delivery, we are also making progress on self-help activities to drive efficiency and our long-term transformation to build the capabilities which will underpin our future growth. We are making good progress on focusing our supply chain footprint and have begun implementing our strategic partnership with Capgemini.

Looking ahead to the second half, while tensions in the Middle East have led to a more uncertain macroeconomic environment, we continue to be confident of delivering a step-up in adjusted operating profit growth, in line with our full year guidance.”

DELIVERING AGAINST OUR STRATEGIC PRIORITIES

Driving sustainable value in combustibles

×  Tobacco volumes down -1.5%, with growth in our AAACE region offset by declines in Europe and the Americas

×  Robust tobacco pricing supports 1.5% growth in tobacco net revenues and adjusted operating profit

×  Strong pricing in our wider footprint supported good tobacco net revenue growth in other market clusters, e.g. Africa, Asia, Middle East and Turkey (AMET) and Southeast Europe

×  Aggregate market share across our priority markets down -16bps as we continue to balance share and value,
and be more choiceful in focusing on more profitable segments for long-term, sustainable value creation

Building scale in Next Generation Products

×  Multi-category approach delivering market share gains in all three categories and strong volume growth in all regions

×  In modern oral, US Zone growing volume share; new product launches in Skruf and Zone in Nordics and
UK driving growth

×  New pod-based blu bar and blu kit ranges performing well as markets continue to transition to re-useable systems across Europe; growing share in UK, France, Germany and New Zealand; double-digit shares in UK, France and Spain

×  Heated product sales growing strongly, driven by Pulze 3.0 in Europe and AAACE, particularly Italy, Greece and Czechia

Progress on Transformation

×  Focused on self-help activities to drive efficiency and investment in capabilities to drive growth

×  On track to deliver £320m cost savings per annum by 2030

×  Strong momentum behind manufacturing footprint rationalisation; manufacturing and operational excellence

×  Strategic partnership with Capgemini gives us access to new capabilities to support growth, including data-led insights and agentic AI, that will enable us to capture new commercial opportunities and deliver efficiencies: transfer of 386 roles completed in H1

×  Continued rollout of enterprise platforms. Go-lives in Australia and our Radom manufacturing facility

RESULTS OVERVIEW*

Tobacco & NGP net revenue growth driven by resilient tobacco pricing

×  Tobacco & NGP net revenue up 1.8%

×  Solid tobacco pricing of 3.0% driven by a broad base of markets; tobacco net revenue up 1.5%

×  Tobacco volumes down -1.5% (to 85.7bn SE) reflecting launches in AAACE offsetting market size declines in Europe and the USA

×  NGP net revenue up 7.5% as strong growth in Europe and AAACE more than offset declines in USA

×  Reported revenue grew 0.8%, reflecting volume growth in AAACE, growth in NGP and gains in Distribution offsetting weaker volumes in Australia

Delivering growth in adjusted operating profits

×  Group adjusted operating profit grew 0.6% on prior year, driven by improved profitability in tobacco offset by a decline in adjusted operating profit in Distribution

×  Reported operating profit declined -36.5% reflecting higher costs relating to the Delaware settlement charges and 2030 Strategy activities

×  Tobacco adjusted operating profit increased 1.5%, driven by pricing offsetting volume declines and increased investment, as well as impact of Australia and US tariffs; reported tobacco operating profit down -38.3% at actual rates due to costs associated with the Delaware settlement and implementation of 2030 Strategy

×  NGP adjusted loss of £40m, a £3m increase on prior year, reflecting a strong performance in Europe and AAACE offset by the decline in US NGP net revenue in H1; reported NGP operating losses reduced £1m reflecting the decision to transition our legacy myblu vaping business out of the US market, offsetting lower amortisation of intangibles

×  Distribution adjusted operating profit declined -3.0%, as an improvement in long-distance transportation was offset
by a decline in tobacco due to lower profit on inventories versus the prior year

×  Adjusted EPS up 5.3% reflecting increased adjusted operating profit and reduced share count more than offsetting increased finance costs

×  Reported EPS declined -38.1% as a result of lower operating profits due to the Delaware settlement and 2030 Strategy costs, a higher tax rate, partly offset by lower financing costs and reduced share count due to the ongoing share buyback

Free cash flow supporting investment and shareholder returns

×  Adjusted operating cash conversion of c.98% on a 12-month basis

×  Following the decision of the Supreme Court of Delaware in December 2025, a payment of £150 million was made
to R J Reynolds in the period; the remaining £162 million to be made in instalments over the next three years

×  Adjusted net debt £10.5bn; adjusted net debt to EBITDA on a 12-month basis remained flat at 2.4x; reported net debt £10.9bn; expect around 2.0 times at the year end

×  Interim dividend per share up 4.0% to 83.36 pence, in line with our progressive dividend policy

×  Ongoing, multi-year evergreen buyback with £1.45bn underway this year

×  Cumulative capital returns from FY21 to HY26 of c.£11.5bn, representing c.77% of market capitalisation at Capital Markets Day in January 2021

*    All measures at constant currency unless otherwise stated.

OUTLOOK

Our expectations for the financial year are unchanged and in line with our guidance given in November 2025 and with our medium-term guidance set out at our Capital Markets Day in March 2025. While the conflict in the Middle East has resulted in a more uncertain macroeconomic environment, we have not seen a material impact to date. We will continue to monitor the situation. The longer this persists, the more likely there could be a more meaningful impact on input costs and consumer demand, including duty free. We remain focused on delivering full year results in line with our guidance.

On a constant currency basis, we expect to deliver low-single-digit tobacco and double-digit NGP net revenue growth. Tobacco pricing will continue to more than offset cigarette volume declines and is expected to have more of a benefit in the second half. In NGP we expect a stronger second half, given the negative impact of one-offs in H1, plus new Zone flavour launches and targeted execution.

Group adjusted operating profit is expected to grow in the 3% to 5% range, on a constant currency basis. Growth is expected to accelerate in the second half, driven by flow through of combustible price increases and operational gearing, with a stronger performance in both AAACE and the US. In NGP, we expect continued momentum in Europe and AAACE, and an improved US performance.

After 2030 Strategy costs and the first instalment of the Delaware settlement, we expect to generate free cash flow of at least £2.2 billion in FY26, in line with previous guidance. Growth in operating profit combined with the impact of our ongoing share buyback is expected to result in at least high single-digit adjusted earnings per share for the full year. At current rates, foreign exchange translation is expected to be a headwind of 0-1.0% to net revenue, adjusted operating profit and earnings per share.

Looking beyond the current fiscal year, we remain committed to the plans and medium-term guidance we provided in our 2030 Strategy in March 2025 to generate another five years of sustainable growth and long-term shareholder value through a progressive dividend and an evergreen share buyback.