Imperial Brands trading update: guidance reiterated and 2030 plan gets off to a strong start
Imperial Brands has stuck to its full-year guidance and flagged a solid first half, powered by robust pricing in tobacco and ongoing momentum in next generation products (NGP). Management is also leaning into shareholder returns with a sizeable buyback and strong free cash flow – all while investing behind a 2030 transformation to be more consumer-centric and data-led.
There are moving parts (FX headwinds, US promotional pressure, and wider geopolitical uncertainty), but the tone is confident and the second half is expected to do the heavy lifting – as guided previously.
FY26 guidance: what Imperial is promising at constant currency
| Metric | FY26 guidance | Notes |
|---|---|---|
| Tobacco net revenue | Low-single-digit growth | Pricing offsetting modest volume decline |
| NGP net revenue | Double-digit growth | Scale-up in heated tobacco, vape and modern oral |
| Group adjusted operating profit | 3-5% growth | Second-half weighted |
| Earnings per share (EPS) | At least high-single-digit growth | Helped by buyback |
| Free cash flow | At least £2.2 billion | Strong cash conversion continues |
All of the above are at constant currency, which strips out exchange rate moves.
First-half trading: pricing power meets NGP progress
For H1, Imperial expects low-single-digit growth in combined tobacco and NGP net revenue. Tobacco net revenue should grow low-single digit as price rises more than offset a low single digit decline in combustible volumes. That is the classic tobacco equation – fewer sticks, higher prices.
In NGP, net revenue is set to grow around mid-to-high single digit, with double-digit growth in both Europe and the AAACE region. Imperial says it will grow share across all three NGP categories in H1:
- Heated tobacco – Pulze 3.0 gaining momentum, particularly in Italy and Greece.
- Vape – the blu kit range continues to perform well.
- Modern oral – new launches under Skruf and Zone in the Nordics and UK are driving performance.
On market share, management is prioritising value over volume. Having stabilised aggregate share across the top five markets, it now expects a modest aggregate share reduction in H1 while still growing tobacco adjusted operating profit. That is a deliberate trade to support profitability.
Profit shape: slightly up in H1, heavier acceleration in H2
Group adjusted operating profit is anticipated to be slightly higher year on year in H1. Europe and the wider AAACE portfolio are the standouts, offset by the US, Australia and Logista. Tobacco adjusted operating profit should grow at a similar rate to last year, while NGP adjusted operating losses are expected to be moderately higher as investment continues to build scale.
The step-up is guided to arrive in H2, helped by the usual flow-through of price increases taken in H1 and the phasing of investment.
United States: Zone holds share, revenue softer; Malibu launch to support H2
In the US, Zone is maintaining volume share, but heightened promotional activity means NGP net revenue is expected to be lower than the same period last year. Imperial expects growth in both tobacco and NGP net revenue and adjusted operating profit to accelerate in H2, supported by earlier and planned price increases, the March launch of the new Malibu cigarette brand, fresh flavours for Zone, and a more targeted channel strategy.
Cash, buybacks and balance sheet: returns remain front and centre
Adjusted operating cash conversion is strong on a 12-month basis, and Imperial is on track to deliver at least £2.2 billion of free cash flow this year. Following the December 2025 Delaware Supreme Court decision, the company paid $200 million to R J Reynolds in H1, with the remaining $234 million to be paid in roughly equal instalments over the next three years. Despite this, leverage is still expected to sit at the lower end of the 2.0-2.5 times net debt to EBITDA range.
| Capital returns | Status |
|---|---|
| FY26 share buyback | £1.45 billion planned; £0.7 billion completed as at 31 March 2026 |
| Residual FY24 programme | £0.1 billion completed in H1 |
| Total repurchased (combined) | Approximately 3.2% of issued share capital as at 30 September 2025 |
The “evergreen” buyback programme to 2030 continues alongside a progressive dividend policy. That combination should underpin EPS growth, especially useful in a year with currency headwinds.
FX and geopolitics: the realism check
Translation foreign exchange is expected to be a circa 2.0-2.5% headwind on first-half EPS and 0-1% for the full year. The company also flags an uncertain geopolitical and macro backdrop due to the conflict in the Middle East. There has been no material impact to date, but the potential effect in H2 remains uncertain; a further update is due with H1 results on 12 May.
My take: why this matters for investors
- Confidence intact: Reiterating FY26 guidance suggests management sees no cracks in the pricing-power story and remains confident in the NGP scale-up.
- Quality of growth: Accepting a modest share dip in top markets to protect margins is, in my view, rational. It supports cash generation and returns.
- NGP traction, sensibly paced: Share gains across all three categories and strong regional growth are encouraging, even if losses are “moderately higher” as they invest.
- US is the swing factor: Promotional pressure is denting NGP revenue now, but H2 catalysts (price mix, Malibu, new flavours, channel focus) could turn that around.
- Shareholder returns are robust: A large, ongoing buyback plus at least £2.2 billion free cash flow, with leverage at the low end of the target range, is supportive for total returns.
- Risks to watch: FX headwinds on EPS, the uncertain geopolitical backdrop, and the need to execute cleanly in NGP while defending combustible profit pools.
What to watch next
All eyes on 12 May for interim results, where we should see:
- Confirmation of H1 net revenue growth and the size of the H2 step-up in adjusted operating profit.
- NGP revenue growth split by category and region (currently directional only). Detailed numbers are not disclosed in this update.
- US progress post-Malibu launch and early read-through from Zone flavour extensions.
- Cash flow cadence and any update on the buyback pace relative to the £1.45 billion target for FY26.
Jargon buster
- NGP (next generation products): Imperial’s non-combustible portfolio, including heated tobacco, vape, and modern oral (nicotine pouches).
- Adjusted operating profit: A non-GAAP measure used by the company to compare performance between periods by excluding certain items (definition unchanged from prior results).
- Constant currency: Results adjusted to remove the effect of exchange rate movements when translating overseas operations.
- Share buyback: The company repurchases its own shares, which can support EPS growth. The percentage of capital represented by repurchases is approximately 3.2% versus the issued share capital as at 30 September 2025.
- Leverage (net debt to EBITDA): A measure of balance sheet gearing; Imperial expects to be at the lower end of its 2.0-2.5 range this year.
Bottom line: this is a steady, confident update. Pricing is doing its job, NGP is building, and cash is flowing. Delivery in H2 – particularly in the US – will determine how comfortably they land the year’s targets.
