Imperial Brands PLC

The company said group adjusted operating profit grew 0.6% in the first half. It generated GBP 2.6 billion of free cash flow on a 12-month basis, with leverage at 2.4x, flat year over year and within target range. Management said tobacco net revenue grew in low single digits, and NGP net revenue would have been double digit at group level excluding a one-off US promotional timing issue; NGP losses were increased by around GBP 13 million because of that item. Guidance was reaffirmed: low-single-digit tobacco net revenue growth, double-digit NGP net revenue growth, adjusted operating profit growth of 3% to 5%, at least high-single-digit EPS growth, and at least GBP 2.2 billion of free cash flow, all at constant currency. It also expects FX to be a 0% to 1% headwind to operating profit and EPS growth.

Lukas Paravicini framed the half as evidence that the company is both “performing” and “transforming.” He emphasized the challenger strategy: protect value in combustibles, build scale in NGP, and use pricing and portfolio discipline rather than chasing low-return volume. Tone-wise, he was confident and consistent, repeatedly saying the business is well placed for the second half and that the company will deliver within its guidance.

Murray McGowan highlighted broad-based growth in tobacco and NGP, but noted headwinds from La Hista and one-offs in the US and Australia. He called out GBP 2.6 billion of free cash flow on a 12-month basis, 98% operating cash conversion, leverage of 2.4x, and an adjusted tax rate of 23.5%, flat year over year. He also said the H1 one-offs were over GBP 50 million, should ease materially in H2, and that the company remains on track for at least GBP 2.2 billion of free cash flow for the full year despite Delaware settlement cash costs and strategy implementation costs.

Analysts pressed on whether the company would land in the upper or lower end of 3% to 5% AOP growth, and management declined to narrow guidance, saying it is on track and H2 should benefit from normal pricing phasing and reduced one-off drag. Questions also focused on market share versus value share, NGP’s US strategy after FDA developments and the planned exit from blu, German tax risk, the Middle East conflict, and duty drawback timing; management said it prefers a triangulation of price, volume, and share rather than a single metric, remains committed to US modern oral, sees German tax changes as unlikely to affect FY26, and said duty drawback would likely contribute in the second half of FY27 with full impact in FY28. Management also said the Middle East crisis has not yet had a material impact but is being monitored closely.