Shares in Imperial Brands (LON:IMB) puffed higher after the tobacco and vape firm reiterated FY26 profit guidance and launched a £1.5 billion buyback for FY27. Led by CEO Lukas Paravicini, Imperial Brands delivered its sixth consecutive year of tobacco sales growth in FY26.
And the FTSE 100 constituent is confident of achieving savings of ‘at least £320 million’ by 2030.
Guidance reiterated
In a well-received pre-close trading update, Imperial Brands said it is on track to deliver FY26 guidance on all metrics. These include adjusted operating profit growth within the 3% to 5% range and high-single-digit adjusted earnings per share growth.
The company behind brands including Lambert & Butler, Gauloises and Golden Virginia notched up its sixth successive year of tobacco revenue growth in FY26. This was driven by robust pricing and share gains in the firm’s target segments in the US and Germany, partially offset by low-single-digit volume declines at a group level.
Consensus forecasts for Imperial Brands
| Year to September | FY25A | FY26E | FY27E |
| Revenue (£m) | 32,171 | 10,076 | 10,226 |
| Net profit (£m) | 2,071 | 2,586 | 2,697 |
| EPS (p) | 179 | 335 | 362 |
| DPS (p) | 160 | 167 | 174 |
Source: Stockopedia
Encouragingly, Bristol-headquartered Imperial Brands continues to build scale in NGP (next generation products) with double-digit sales growth delivered last year.
‘We are seeing strong momentum in heated tobacco with Pulze 3.0 and new iD sticks,’ said the company. ‘In vape, our blu kit range continues to perform well and in modern oral our existing portfolio of growing brands, including Zone and Skruf, has been enhanced by the acquisitions of Black Buffalo in the US and Helwit in Sweden.’
£1.5 billion buyback
Imperial Brands is on track to deliver free cash flow of more than £2.2 billion for FY26. And having completed a £1.45 billion buyback for FY26, the company announced a £1.5 billion share buyback for FY27, reflecting ‘continued confidence in future business performance’.
Management highlighted the strong momentum behind the group’s transformation towards becoming ‘a more consumer-centric, data-led, agile and efficient challenger’. And Imperial Brands is confident of achieving at least £320 million of savings by 2030.
Thanks to its high dividend yield, Imperial Brands is a popular income stock with private investors. And we think most shareholders will be pleased with today’s positive update from this cash flow monster.
Over the past six years from FY21 to FY26, Imperial Brands has delivered close to £13 billion of cumulative capital returns to shareholders through dividends and buybacks combined.
Higher prices for tobacco products continue to offset weaker volumes, and NGP revenue is growing steadily. So far, the Middle East turmoil hasn’t affected demand, but it remains a risk for investors to monitor.
We appreciate some investors won’t touch tobacco stocks due to ethical reasons, regardless of valuation. That said, Imperial looks cheap on a prospective FY27 price-to-earnings ratio of less than seven times. And the stock offers a bumper seven per cent dividend yield according to Stockopedia. In our view, happy holders should keep compounding those dividends.
