Imperial Brands to dish out more to shareholders as e-cigarette sales grow

Winston cigarette maker Imperial Brands has said it plans to dish out more cash to its shareholders, after reporting fast growth of its vapes and alternative smoking products.

The tobacco giant promised to increase the amount of money returned to shareholders from £2.4 billion to £2.8 billion in the year ahead.

It comes after the company said it was expecting sales to have grown this year across its cigarette and so-called next generation products (NGPs).

Vapes, heated tobacco, and oral nicotine pouches all come under the umbrella of NGPs, because they are manufactured to separate nicotine from harmful tobacco smoke.

Imperial Brands, which still makes the bulk of its sales from traditional cigarettes, has benefited from hiking prices.

It is among tobacco firms to have come under pressure in recent years thanks to a broad decline in the number of people smoking cigarettes, particularly in some of its largest western markets.

But that decline has slowed over the past year across the markets it operates in, the business said.

Net revenue from NGPs is expected to have grown in the range of 20% to 30% over the year to the end of September, compared with the previous year.

Imperial Brands said it benefited from the launch of innovative products including for the Blu vape brand, non-tobacco heat sticks for the Italian iSenzia brand, and new flavours of oral nicotine products.

The company has been stepping up its development of alternative smoking products as countries around the world move to regulate cigarette use.

In the UK, the Prime Minister has not ruled out a smoking ban in outdoor spaces such as pub gardens, hospital and university campuses, and sports grounds.

Derren Nathan, head of equity research at Hargreaves Lansdown, said: “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.

“In aggregate, tobacco volume pressures have eased across the company’s focus markets, and despite slowing price hikes for the pleasure of lighting up, pricing has been strong.

“However, market share declines in Germany and the UK remain a source of concern.”

Meanwhile, Imperial Brands said it was upping returns for shareholders, with a nearly 14% increase in share buybacks to £1.25 billion, and a cash dividend worth about £1.5 billion.

Shares in Imperial Brands were up nearly 4% on Tuesday.