(Reuters) -Imperial Brands will grow annual operating profits by 3-5% and launch a share buyback every year until 2030, the cigarette maker said, as it prepared to set out its growth strategy at a capital markets day on Wednesday.
The maker of Winston cigarettes has enjoyed a rebound in sales and returns after retreating to focus on core markets and its tobacco business following an earlier foray into vapes that saw it lose market share.
It outlined a new five-year strategy on Wednesday signalling a continuation of that focus but also an effort to build scale in smoking alternatives, including its e-cigarette brand blu, nicotine pouch brand Zone and heated tobacco device Pulze.
Over the years to 2030, that plan would deliver up to 5% operating profit growth a year, led by smoking alternatives, and an annual share buyback, with free cash flows of up to 3 billion pounds ($3.9 billion) per year, it said in a statement.
“The strategy builds on the firm foundations of our current plan, which has created a better business delivering a stronger, more consistent operational and financial performance, and excellent returns for shareholders,” Chief Executive Stefan Bomhard said.
Imperial’s shares, however, fell following the announcement to stand 1.35% down by 1334 GMT.
Panmure Liberum analyst Rae Maile said some analysts had slightly higher growth estimates and Imperial’s foreign exchange guidance was slightly worse than anticipated, which may have hit the shares, but overall Imperial was set to deliver returns.
“Buy the shares before the company can,” he said in a note to clients.
Imperial also said it was on track to deliver on annual guidance for its current financial year.
($1 = 0.7762 pounds)
(Reporting by Aby Jose Koilparambil in Bengaluru and Emma Rumney in London. Editing by Savio D’Souza and Mark Potter)
