Imperial delivers flat revenues as volume declines hold back growth

Tobacco and vaping giant Imperial Brands announced that full-year revenues were flat as lower tobacco volumes were offset by strong growth in next-generation products (NGP).

Reported revenues for the 12 months to 30 September totalled £32.5bn, down 0.2% year-on-year.

Tobacco and NGP net revenue grew +1.4% at constant currency when excluding Russian operations in the prior-year comparator after Imperial's exit from the region in April 2022. This comprised 0.7% growth in tobacco and 26.4% from NGP.

Tobacco volumes excluding dropped 7.1% year-on-year, with declines across all major regions "as a result of pressure on consumer spending", the company said. However, strong pricing was able to outweigh the volume declines.

Despite the broadly flat top-line performance, operating profits jumped by a 26.8% to £3.4bn, but this growth was mostly due to the one-off exit charges related to the Russian exit the prior year. Adjusted operating profits rose 5.2% to £3.9bn.

Free cash flow was £2.36bn by the year-end, down slightly from £2.56bn the year before, while net debt was more or less unchanged at £8.44bn.

The company declared a final dividend of 146.82p per share, up 4% on last year, taking total returns for the year to £2.4bn.

"Three years into Imperial's transformation, our investments in consumer capabilities, changes to the way we work, and a new performance culture are translating into stronger, more sustainable operational and financial outcomes," said chief executive Stefan Bomhard.

"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."