Headline: “FY26 guidance reiterated, but quality of the print looks weak”
Imperial Brands: H1 2026 Trading Update – Key Points
– Guidance reaffirmed: FY26 outlook unchanged, with low-single-digit tobacco growth, double-digit NGP growth, 3–5% EBIT growth, at least high-single-digit EPS growth, and more than £2.2 billion FCF
– H1 broadly steady: Group revenue seen up low-single digit, supported by pricing in combustibles and mid-to-high single-digit NGP growth. Double-digit NGP growth in Europe & AAACE, NGP revenue decline in the U.S. Adjusted operating profit expected to be slightly higher compared to H1 2025
– NGP scaling continues: Growth driven by Pulze 3.0 (heated tobacco), blu vapes, and Skruf/Zone nicotine pouches, though NGP losses expected to widen modestly
– Combustibles strategy shift: Focus on profitability over share; modest share losses expected in top-5 markets, but with continued profit growth.
– H2-weighted delivery: Profit growth to accelerate in H2, supported by pricing carryover, reduced promotional drag in the US, and new product initiatives (e.g., Malibu, Zone flavours).
– Cash & capital returns intact: Strong cash conversion, more than £2.2 billion FCF target reaffirmed, leverage at low end of range, and ongoing share buybacks alongside progressive dividends.
– No impact from the geopolitical tensions in the Middle East, but implications remain unclear. $434 million payment to Reynolds American (BAT) in the U.S.
Imperial Brands: H1 2026 Trading Update – Summary
Imperial Brands reiterates its FY26 guidance, including low-single-digit growth in tobacco net revenue, double-digit growth in NGP net revenue, 3–5% growth in adjusted operating profit, and at least high-single-digit EPS growth at constant currency. Free cash flow is expected to reach at least £2.2 billion.
Heightened geopolitical tensions in the Middle East have introduced additional macroeconomic uncertainty. While there has been no material impact on the business to date, the potential implications for H2 2026 remain unclear. A further update will be provided alongside the H1 2026 results on May 12, 2026.
For H1 2026, Imperial expects low-single-digit growth in group net revenue. Tobacco performance is supported by robust pricing and low-single-digit volume declines. In NGP, the company continues to build scale and expects mid-to-high single-digit net revenue growth, with double-digit expansion in both Europe and AAACE. This reflects continued momentum in heated tobacco (Pulze 3.0, particularly in Italy and Greece), solid performance of the blu vape range, and new nicotine pouch launches (Skruf and Zone) across the Nordics and the UK.
In combustibles, following share stabilisation across its top-five markets, Imperial is refining its strategy to prioritise more profitable segments. As a result, modest aggregate share losses are expected in H1, alongside continued growth in tobacco adjusted operating profit.
Adjusted operating profit is anticipated to be slightly higher year-on-year, driven by strong performance in Europe and AAACE, partly offset by weaker contributions from the US, Australia, and Logista. Tobacco profit growth is expected to remain broadly in line with last year, while NGP losses are projected to widen moderately. As usual, earnings will be weighted toward the second half, supported by the flow-through of pricing actions and the phasing of investments.
In the US, Zone continues to perform well, maintaining volume share as the brand builds long-term equity. However, increased promotional intensity is expected to result in NGP net revenue lower than the same period last year. Growth in both tobacco and NGP is expected to accelerate in H2, supported by additional pricing in combustibles, the March launch of the Malibu cigarette brand, and further NGP initiatives, including new flavours and a more targeted channel strategy.
Cash generation remains strong, with adjusted operating cash conversion robust on a 12-month basis. Imperial remains on track to deliver at least £2.2 billion in free cash flow for the full year. Following the Delaware Supreme Court decision in December 2025, a $200 million payment was made to Reynolds in H1, with the remaining $234 million to be paid in roughly equal instalments over the next three years.
Leverage is expected to remain at the lower end of the 2.0–2.5x net debt to EBITDA range. Foreign exchange is projected to represent a 2.0–2.5% headwind to H1 EPS and a 0–1% headwind for the full year. During H1, Imperial completed the remaining £0.1 billion of the October 2024 share buyback and, as of March 31, 2026, had executed £0.7 billion of its £1.45 billion programme for the year. In total, this represents approximately 3.2% of issued share capital as of September 30, 2025. The company remains committed to returning surplus capital through its ongoing “evergreen” share buyback programme alongside a progressive dividend policy.
Imperial also reports a solid start to its 2030 strategy, with continued progress in becoming a more consumer-centric, data-led, and agile organisation. Key initiatives in H1 included the rollout of a long-term partnership with Capgemini, further optimisation of the supply chain footprint, and continued deployment of enterprise IT systems.
Interim results for the six months ended March 31, 2026 will be announced on May 12, 2026.
Download Imperial Brands – H1 2026 Trading Update statement
