Imperial unveils £1bn share buyback as it cheers boost from travel rebound

The group behind brands such as blu, Gauloises cigarettes and Rizla said the boost from travel markets has driven higher sales across southern Europe and in duty-free markets, which is helping partly offset a drop in sales by volume, particularly in northern Europe.

It added that the growth rate of tobacco net revenues had improved over the second half of its financial year due to price changes.

Imperial has also been given a fillip by the weak pound, which is seeing the group benefit from exchange rates on its international earnings, with a gain of about 1 per cent on full-year net revenues and 2 per cent on annual underlying earnings per share.

The pound hit an all-time low against the US dollar last month amid concerns over the Government’s economic plans and while it has clawed back some lost ground, it is still down heavily this year.

On a constant currency basis, Imperial said it remains on track for full-year revenues and underlying earnings to grow by around 1 per cent.

Imperial announced the launch of its share buyback programme, saying its “strengthened balance sheet position means we are now in a position to start to return surplus capital to shareholders”.

It will buy back up to £1bn of shares until the end of September next year, bringing total capital returns over 2022-23 to more than £2.3bn.

Stefan Bomhard, chief executive of Imperial Brands, said: “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.

“Today’s announcement is underpinned by this improving performance and our confidence in being able to continue generating strong cash flows to support growing shareholder returns in the years to come.”

The group’s update added that it was rolling out its vaping and heated tobacco products – or so-called next generation products – into new markets, having recently launched its heated tobacco brands Pulze and iD in Italy, which is Europe’s largest heated tobacco market.

Richard Hunter, Head of Markets at interactive investor, commented: “In deteriorating markets investors have sought the refuge of solid defensive options and the tobacco sector has been one which is back in investment favour.”