Imperial Brands (IMB) 2024 Deutsche Bank dbAccess Global Consumer Conference summary

Strategic progress and business performance

• Focused on core tobacco business in top five markets, achieving stable or growing market share after years of decline.

• Net revenue grew 2.8%, the highest in over a decade, with NGP contributing 0.5% and combustibles 2.3%.

• Adjusted EPS grew 7.7%, supported by share buybacks and dividend yield; interim dividend per share grew by 4.0%.

• NGP business grew across vaping, heated tobacco, and modern oral, with NGP net revenue up 16.8% and profitability targeted by end of FY2025.

• Operational simplification and new working methods are being leveraged to drive efficiency and transformation.

Capital allocation and shareholder returns

• Capital allocation prioritizes organic investment, NGP M&A, maintaining leverage at 2.0-2.5x, and a progressive dividend.

• CapEx remains light at around GBP 350 million, with innovation driven by partnerships.

• GBP 1.1 billion share buyback underway for FY24, a 10% increase over FY23, aiming for GBP 6 billion cash return to shareholders over three years.

• Free cash flow yield at 18.2%, dividend yield over 8%, and combined returns (dividend + buyback) at 15%, both significantly above global FMCG averages.

• Operating cash conversion reached 97% over 12 months, with free cash flow of £2.3bn, up £0.5bn from HY23.

Market-specific performance and strategy

• US market growth driven by sales force investment, brand repositioning, and a complete portfolio across price points.

• Spain's share gains attributed to focus on local brands, consumer-driven innovation, and targeted marketing.

• Germany remains challenging but showed reduced share loss, with turnaround efforts mirroring US strategy.