Imperial Brands: Interim Update

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Guidance

On track to meet full-year guidance

H1 2023 Revenue (excl. the impact of Russia exit) & Operating Profit: at a similar level to H1 2022

FY23 Revenue: low single-digit growth

Operating Profit: mid-single digit growth over the next 3 years

Key Highlights

Stable aggregate SoM across top-5 combustible markets: growing or stable market share in the US, Spain and Australia, offsetting declines in Germany and the UK

H1 NGP revenue to be ahead of the prior period: growth in Europe (HnB market expansion & blu 2.0 launches) more than offsetting the US decline (uncertainty caused by the marketing denial order for myblu)

Pulze and iD (heated tobacco) is now available in seven European markets. blu 2.0 (e-cigarette) is launched in the UK, Spain, France, Czechia and Portugal

6.5% FX tailwind on H1 2023 EPS and 2.5-3.5% tailwind on FY23 EPS

FY23 leverage (adj. net debt to EBITDA) to remain at the lower end of 2.0-2.5 range

Completed £523Mn of the £1Bn share buyback for this year

Our take-away

Not much to cheer about. Combustible SoM is a mixed picture despite PMI & BAT winding down their investments in the category. NGP revenue will be just “ahead” of the prior period while the larger rivals are delivering 20-40% growth per annum. Future earnings will continue to be impacted by the NGP catch-up investment

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