Imperial Brands has announced it will increase the amount it intends to return to shareholders in 2025 after revealing its trading performance was in line with expectations.

The Bristol-headquartered tobacco company said it would increase shareholder returns in FY25 to £2.8bn, revised upwards from a £2.4bn commitment in FY24.

This includes a share buyback of £1.25bn – an increase of 13.6% – as well as £1.5bn of cash dividends to be made payable in FY25 as part of a move to four equal quarterly dividend payments in the future.

Imperial Brands revealed it had recorded a year of “operational and financial delivery” against a five-year strategy to transform the business.

At constant currency, the group is on track to deliver in line with its full-year guidance, with an acceleration in tobacco and next generation products (NGP) net revenue growth compared to last year.

Head of equity research at Hargreaves Lansdown, Derren Nathan, said that Imperial Brands’ “execution and narrowed focus on core markets” are helping it keep organic growth moving, at a time that larger rivals have been “going in reverse”.

“Imperial Brands is managing to drive growth not only in its fledgling next generation brands, but also in ‘legacy’ tobacco products which still make up the lion’s share of the business,” he commented.

“It’s confident of meeting expectations for the year just ended, with underlying operating profit growth firmly in the mid-single digit range.”

Nathan also highlighted that the group’s strong cash conversion is allowing Imperial Brands to “up the ante on payouts to shareholders”.

He added: “Next year, Imperial Brands is committing to a 13.6% increase in share buybacks to £1.25bn and dividend pay outs of £1.5bn.

“Based on the current share count, that equates to dividends of about 176p per share but could end up being closer to 200p depending on the price which buybacks are effected at.”

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