Imperial Tobacco announced its 2030 strategy, which aims to achieve sustainable growth and long-term value creation over the next five years by strengthening its traditional tobacco business and expanding its new tobacco products (NGP) business.
Key points:
1. Imperial Tobacco launches Strategy 2030 to drive growth in both traditional tobacco and new tobacco products (NGP).
2. Focus on the five traditional tobacco markets, expand NGP business, and achieve net revenue growth.
3. Maintain the capital allocation framework, implement share buyback and progressive dividend policy, and expect continuous growth of financial indicators in the next five years.
On March 26, Imperial Brands plc (IMB) announced its 2030 strategy at Capital Markets Day in London, which aims to achieve sustainable growth and long-term value creation over the next five years by strengthening its traditional tobacco business and expanding its new tobacco products (NGP) business.
Focus on promoting traditional tobacco and new tobacco businesses
IMB’s 2030 strategy will continue the successful foundation of its current five-year plan by focusing on five priority traditional tobacco markets (the United States, Germany, the United Kingdom, Spain and Australia), which account for approximately 70% of IMB’s adjusted tobacco operating profit. IMB continues to advance in these markets to better drive sustainable growth and cash flow.
In the New Tobacco Products (NGP) segment. IMB has built a fast-growing and flexible business platform covering trusted brands and differentiated products across all three categories. IMB plans to scale the NGP business by further deepening consumer insights, leveraging differentiated brands and developing sales capabilities.
Strengthen brand and organizational capabilities
The IMB will drive this goal through three strategic elements:
- Differentiated consumer and brand capabilities: Deepen insights into target groups, develop more differentiated and challenging brands, and innovate for core needs.
- High-performance culture: Create a culture of clear responsibility, collaboration across geographies and long-term thinking, invest in leadership skills and improve business planning.
- A simplified, efficient, data-driven organization: Drive supply chain efficiency through global business services and manufacturing excellence, and leverage data to support employee decision-making.
Capital allocation framework and shareholder returns
IMB will maintain a capital allocation framework that prioritizes supporting organic growth in its traditional tobacco and NGP businesses, and maintain a strong and efficient balance sheet to support an investment-grade credit rating. It plans to return capital to shareholders through an ongoing “evergreen” share repurchase program. The amount of which will be determined based on business performance, and maintains a progressive dividend policy that provides reliable cash returns.
Financial outlook for the next five years
IMB anticipates that its 2030 strategy will support IMB in achieving the following medium-term growth targets (at constant exchange rates) :
- Tobacco and NGP net revenue: Tobacco net revenue is expected to grow in the low single digits and NGP net revenue is expected to grow in the double digits.
- Group adjusted operating profit: Expected to grow by approximately 3-5% annually.
- Adjusted earnings per share (EPS): Expected to grow in the high single digits, benefiting from the ongoing share repurchase program.
- Free cash flow: Expected to generate between £2.2 billion and £3 billion per year.
