By Timothy S. Donahue
Imperial Brands posted another year of stable operational growth in FY2025, with strong cash flow, increasing adjusted earnings, and double-digit growth in Next Generation Products, even as reported earnings were impacted by foreign exchange headwinds and costs related to the company’s multi-year strategy.
The company reported that tobacco and NGP net revenue increased by 4.1 percent at constant currency. Executives said this reflected continued strength in price mix for combustibles and double-digit growth across all smoke-free categories. NGP net revenue grew by 13.7 percent, boosted by gains in oral nicotine in the United States and Europe, as well as further momentum in heated tobacco and vapor.
Chief Executive Officer Lukas Paravicini told analysts during the results webcast that the company’s progress since 2020 has strengthened Imperial’s competitive position. “Our consistently strong operational and financial delivery provides a firm platform on which to build as we embark on the next phase of our strategy,” he said.
Paravicini added that the company intends to keep pressing its investment program. “We will continue to invest in consumer insights, innovation and marketing capabilities. We will also continue to make deliberate, focused choices about which opportunities we pursue, and develop a simpler, more efficient and more agile organization.”
Since FY20, Imperial has gained 48 basis points of market share across its five key markets, a metric the company has prioritized as part of its 10-year plan. FY25 also showed steady or improving share in several territories where Imperial recently relaunched brands or restructured distribution.
Reported group revenue fell 0.7 percent to $32.17 billion due to lower cigarette volumes and unfavorable currency effects. Adjusted operating profit rose 4.6 percent, while reported operating profit declined 1.8 percent.
Adjusted earnings per share increased by 9.1 percent, driven by underlying profit growth and a lower share count. Reported EPS decreased by 16.5 percent. Executives cited foreign-exchange movements and the timing of strategic investments as factors for the decline.
NGP performance remained a key topic in the results discussion. The company stated that the pulse heated tobacco platform and its blu vapor brand performed well in Europe, while modern oral nicotine experienced “broad-based growth,” especially in the United States and Scandinavia. Management described NGP as “an increasingly material contributor” to total revenue, with further growth expected in FY26 as category development speeds up.
Free cash flow reached £2.7 billion, mainly driven by the combustibles business and aided by a one-time tax refund. This cash generation allowed for a further increase in shareholder returns. Imperial completed a £1.25 billion buyback during the year, announced a 4.5 percent rise in the annual dividend, and confirmed that over £10 billion has been returned to shareholders since FY21. A new £1.45 billion buyback for FY26 is already underway.
Paravicini told investors that the company’s financial strength provides stability as the organisation shifts toward the next phase of its transformation. “Our strategy is working and the business is in a stronger position,” he said, emphasising that capital allocation priorities remain unchanged, with sustained investment in the core business and ongoing returns to shareholders.
Looking ahead to FY26, Imperial expects low single-digit growth in tobacco revenue at constant currency, along with another year of double-digit growth in NGP net revenue. Adjusted operating profit is forecasted to rise by 3 to 5 percent. The company noted that NGP will need ongoing investment but emphasized that the category’s current path supports long-term potential.
As the year starts, industry observers will focus on how Imperial balances combustible resilience with NGP scaling and how regulatory developments in major markets influence category adoption. Paravicini said the company remains confident in its ability to navigate the environment. “We have a clear plan and the capability to deliver it,” he told analysts. “We are building a stronger, more competitive and more resilient Imperial Brands.”
