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Tobacco player Imperial Brands has announced the launch of a multi-year share buyback programme, with the intention of buying back £1bn shares by the end of September 2023.

It said this scheme is in line with its five-year strategy to deliver “sustainable growth and enhanced shareholder returns”.

It said the announcement marked the culmination of the two-year ‘strengthening’ phase of its plan, as it moves into the next three-year ‘improving returns’ phase.

Over time, it said, it intends to deliver a material reduction in the capital base, providing an ongoing source of shareholder returns.

Stefan Bomhard, Imperial Brands CEO, said: “The launch of our new buyback programme is an important milestone in our five-year strategy announced in January 2021. Over the past two years, increased investment and a more consumer-centric approach have improved delivery in both our priority combustible markets and next generation product operations. Disciplined capital allocation has strengthened our balance sheet to reach our target leverage levels.

“Today’s announcement is underpinned by this improving performance and our confidence in being able to continue generating strong cash flows to support growing shareholder returns in the years to come. We are committed to a progressive dividend and an ongoing buyback programme to meaningfully reduce the capital base over time.”

Trading in its 2022 financial year has been in line with expectations.

Targeted investment in its five largest combustible markets which account for around 70% of operating profit has driven an improvement in aggregate market share.

At constant currency, the growth rate of its tobacco net revenue improved in the second half compared with the first, driven by a stronger price mix.

As expected, the recovery of international travel has, over the course of the year, led to a return to pre-COVID purchasing patterns. This has led to increased volume declines, particularly in Northern Europe, partly offset by volume growth in Southern Europe and Duty Free.

Its next generation smoke free products have made market share gains with Pulze and iD, in Greece and the Czech Republic, and in the past month launched in Italy, Europe’s largest heated tobacco market.

The consumer trial of blu 2.0, a new pod-based vapour device, in selected cities in France has been “well received by consumers and the trade”.

In line with previous guidance, it expects full-year net revenue and group adjusted operating profit to both grow by around 1% at constant currency.

Looking ahead it said it remains on track to deliver against its five-year plan.

It stated: “The additional investment and the actions we have taken during the initial two-year strengthening phase have built strong foundations and enhanced our resilience as we face a more challenging macro-economic environment.

“Over the next three-year phase of our plan, we continue to expect low single-digit constant currency net revenue growth with constant currency adjusted operating profit growth accelerating to deliver a mid-single digit CAGR over the three years.”

Imperial shares are up 4.5% to 1,981.6p on the news.

Morning update

Diageo has issued some brief trading commentary ahead of its AGM later today.

CEO Ivan Menezes commented: “We have made a good start to fiscal 23, with organic net sales growth across all regions, reflecting our advantaged portfolio, our continued investment in brand building and our agile supply chain and culture. I would like to thank my colleagues for their continued creativity and drive.

“We expect the operating environment to remain challenging with ongoing volatility due to geopolitical uncertainty, a weakening of consumer spending power, inflationary pressures and disruption related to Covid-19. However, I am confident in the resilience of our business and our ability to navigate these headwinds while executing our strategic priorities, including our ambitious 2030 sustainability plan.

“We remain well-positioned to deliver our medium-term guidance for fiscal 23 to fiscal 25 of organic net sales growth consistently in the range of 5% to 7% and organic operating profit growth sustainably in the range of 6% to 9%.”

On the markets this morning the FTSE 100 is flat at 7,054pts.

Risers include McBride, up 7.5% to 24.3p, Just Eat Takeaway.com, up 4.3% to 1,388.4p and Naked Wines, up 3.5% to 83.7p.

Fallers include DS Smith, down 3.6% to 249p, Science in Sport, down 3% to 16p and Virgin Wines, down 3% to 48.5p.

Yesterday in the City

The FTSE 100 suffered a 0.5% set-back yesterday after gains earlier in the week.

Tesco lost 4.1% back to 201.3p on the back of profits falling back in the first half as customers faced “a tough time”.

Ocado dropped 10% back to 456.1p on the sharp slowdown in Tesco’s online sales.

Other fallers included THG, down 7.7% to 36.7p, Just Eat Takeaway.com, down 6.9% to 1,331.6p, Deliveroo, down 6.8% to 86.6p, McBride, down 5.8% to 22.6p, Marks & Spencer, down 5.4% to 96.9p, Naked Wines, down 5.2% to 80.9p and Sainsbury’s down 4.7% to 172.2p.

The day’s few risers included Tesco supplier Hilton Food Group, up 6.2% to 597p, Bakkavor, up 4.4% to 96p, Finsbury Food Group, up 2.4% to 84p, Haleon, up 1.6% to 278.5p, Coca Europacific Partners, up 1.1% to 46.4p and British American Tobacco, up 0.7% to 3,281.5p.

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