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Imperial Brands Shares Rally After Announcing £1bn Share Buyback Programme

Sam Boughedda trader
Updated 6 Oct 2022

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Key points:

  • Imperial Brands released a trading statement Thursday
  • The company announced a £1bn share buyback programme
  • Imperial Brands shares rose more than 4% after the update

Imperial Brands (LON: IMB) shares jumped over 4% in the early part of Thursday's session after it released a trading statement announcing a £1 billion share buyback programme.

The British tobacco company told investors it intends to repurchase up to £1 billion of shares from October 7, 2022, to the end of September 2023. As a result, total capital returns in the full year 2023, which includes dividends and share buybacks, are expected to surpass £2.3 billion, representing approximately 13% of the company's current market capitalisation.

“The launch of our new buyback programme is an important milestone in our five-year strategy announced in January 2021,” commented Stefan Bomhard, Imperial Brands Chief Executive Officer.

“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,” the CEO added. “We are committed to a progressive dividend and an ongoing buyback programme to meaningfully reduce the capital base over time.”

Imperial Brands Daily Chart – Source: IG

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In its trading update, the company revealed that trading in the full year 2022 is in line with expectations and its five-year strategy to deliver sustainable growth and enhanced shareholder returns.

Imperial Brands' tobacco net revenue improved in the second half compared with the first, helped by a more robust price mix. The company added that the recovery of international travel following the pandemic has led to a return to pre-Covid purchasing habits, resulting in increased volume declines, notably in Northern Europe. However, it was partly offset by volume growth in Southern Europe and duty-free.

In line with its previous guidance, Imperial Brands anticipate full-year net revenue and adjusted operating profit to grow by around 1% at constant currency.

Bomhard concluded: “We are committed to a progressive dividend and an ongoing buyback programme to meaningfully reduce the capital base over time.”

Sam is a trader and lead stock market writer at AskTraders. After starting his career in the forex market, Sam now focuses on stocks, specifically consumer staples.