Imperial Brands FY25 Pre-tax Profit Rises, Lifts Dividend, Sees Profit Growth In FY26; Stock Up

Imperial Brands reported FY2025 results with profit before tax rising to £3.13bn (from £3.03bn) while statutory net profit fell to £2.22bn (from £2.75bn) and EPS declined 16.5% to 251.1p; on an adjusted basis PBT was £3.59bn and adjusted EPS rose to 315.0p as group revenue slipped 0.7% to £32.17bn and Tobacco & NGP net revenue increased 1.9% to £8.316bn—cigarette volumes were down 1.7% but pricing generated 3.7% net revenue growth. The board approved a 4.5% higher total dividend of 160.32p, completed a £1.25bn buyback and has a £1.45bn buyback underway, sending shares up ~3.3%. Management sees FY2026 at least high-single-digit adjusted EPS growth and 3–5% constant-currency adjusted operating-profit growth driven by combustible tobacco pricing, with performance weighted to H2, signaling continued pricing-led cash generation to fund returns despite volume pressure.

Analysis

Imperial Brands reported FY2025 statutory profit before tax of £3.13bn versus £3.03bn a year earlier, while statutory net profit fell to £2.22bn from £2.75bn and EPS declined 16.5% to 251.1p; on an adjusted basis PBT rose to £3.59bn and adjusted EPS increased to 315.0p from 297.0p. Group revenue edged down 0.7% to £32.171bn and shares rose about 3.3% to 3,256.00p on the release.

Operational drivers show pricing offsetting a 1.7% decline in cigarette volumes, producing 3.7% net revenue growth in cigarettes and lifting adjusted Tobacco & NGP net revenue 1.9% to £8.316bn, while management expects FY2026 at least high-single-digit adjusted EPS growth and 3–5% constant-currency adjusted operating profit growth. Management notes performance will be weighted to the second half because of combustible pricing and investment phasing.

The board increased shareholder returns with a total dividend of 160.32p (up 4.5%) and completed a £1.25bn buyback with a £1.45bn program underway, supporting EPS and cash returns. The divergence between stronger adjusted metrics and weaker statutory net profit highlights the need to monitor adjustment drivers, cash conversion and H2 delivery against guidance as the main verification points for the outlook.

Key Decisions for Investors

• Consider a tactical overweight or accumulate on weakness given elevated buybacks (£1.25bn completed, £1.45bn underway) and a 4.5% higher dividend, but size positions with awareness that delivery is weighted to H2
• Monitor H2 trading and combustible pricing phasing closely and demand sequential evidence of cash flow and operating profit before increasing exposure
• Require clarity on the reconciliation between statutory and adjusted results and verify free cash flow conversion to ensure buyback/dividend sustainability
• Track cigarette volume trends and NGP net revenue momentum; reduce exposure or hedge if volumes continue to decline and NGP growth fails to offset mix pressure