Imperial Brands (IMB) delivered a steady first half to fiscal 2025, demonstrating the consistency investors have come to expect from one of the UK’s most cash-generative consumer companies. Despite a continued decline in global cigarette volumes, strong pricing, improving NGP margins, and disciplined capital allocation drove earnings higher and strengthened Imperial’s position among Europe’s top dividend payers.
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CEO Stefan Bomhard said the group’s “challenger strategy,” focused on brand renewal, margin discipline, and a pragmatic transition to reduced-risk products, continues to deliver. Imperial gained 6 basis points of aggregate market share across its five priority markets, grew NGP net revenue by 15.4%, and lifted adjusted EPS by 6% year-on-year. The strategy’s emphasis on steady execution rather than aggressive expansion has rebuilt investor confidence and created a foundation for sustainable earnings growth.
Imperial also reaffirmed its full-year guidance for mid-single-digit operating profit and high-single-digit EPS growth, citing stable performance across its European and U.S. businesses. With an active £1.25 billion share buyback and one of the most attractive dividend yields in the FTSE 100, the company continues to reward shareholders while funding category growth in next-generation products.
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Financial Story
Group adjusted operating profit rose 1.8% at constant currency to £1.70 billion, driven by price/mix gains of nearly 6% and reduced NGP losses, which together offset weaker logistics performance. Net revenue from tobacco and NGP increased 3.2%, marking the company’s third consecutive half-year of organic growth as pricing strength outpaced declining volumes. Imperial’s adjusted EPS climbed 6% to 123.9p, while reported EPS rose 0.7% to 96.7p, highlighting the benefits of its ongoing buyback program.
| Metric | H1 2025 | H1 2024 | YoY Change |
|---|---|---|---|
| Tobacco & NGP Net Revenue | £3.66 bn | £3.64 bn | +0.7% (+3.2% CC) |
| Adjusted Operating Profit | £1.70 bn | £1.67 bn | +1.8% |
| Adjusted EPS | 123.9p | 120.2p | +6.0% |
| Free Cash Flow (12 mo.) | £2.4 bn | £2.3 bn | +4% |
| Net Debt / EBITDA | 2.4× | 2.5× | ↓ |
| Interim Dividend | 80.16p | 44.9p | +78.5% |
The interim dividend was raised 78.5% to 80.16p per share as Imperial transitioned to equal quarterly payments, a structural change that simplifies cash returns for shareholders. Free cash flow over the past 12 months reached £2.4 billion, up 4% from last year, while net debt held steady at £10 billion, or 2.4x EBITDA. Imperial continues to expect strong second-half contributions from its U.S. and European markets, supported by the roll-out of new NGP innovations and stable pricing trends across combustibles.
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Broader Market Context
Imperial’s turnaround, launched in 2021, is now entering its consolidation phase, where execution takes precedence over restructuring. The company’s emphasis on pricing discipline and category focus has helped it outperform peers facing more aggressive reinvestment cycles. Unlike BAT and Philip Morris, Imperial has chosen a cash-centric approach, reinvesting selectively in NGP while maintaining generous capital returns to shareholders.
This measured strategy is beginning to pay off. By prioritizing cash conversion and margin stability over rapid scale, Imperial is proving that tobacco companies can evolve profitably without sacrificing financial discipline. With NGP margins improving, leverage under control, and consistent EPS growth, the firm stands as one of Europe’s most dependable large-cap income stocks heading into 2026.
1. Combustibles Remain the Core Engine
Imperial’s tobacco portfolio remains its profit backbone, delivering consistent returns even amid structural industry decline. Price/mix growth of 5.9% across major markets more than offset low-single-digit volume declines, illustrating the company’s resilient pricing power and brand loyalty. In Europe, strong performance from West and Davidoff offset weakness in duty-free and smaller local brands.
In the U.S., Imperial maintained its share in key value segments while improving its profit per stick through disciplined pricing and selective SKU rationalization. The focus on execution rather than volume is central to Imperial’s philosophy, ensuring margins remain stable even as consumption patterns evolve. With continued progress in illicit trade prevention and excise tax pass-through, management expects its combustible business to deliver modest earnings growth in the second half.
2. Next-Generation Products (NGP) Deliver Scale and Margin Gains
Imperial’s NGP business continues to gain traction, marking a clear shift from turnaround mode to growth mode. NGP net revenue climbed 15.4% year-on-year, driven by new product launches and improved retail coverage. The Blu Vapour brand gained 130 basis points of share across Europe, while the Zone Modern Oral brand expanded to 72,000 U.S. retail outlets, achieving a 2.6% national share and positioning Imperial as a credible competitor in the oral nicotine space.
The company’s next major milestone will be the rollout of Pulze 3.0, its upgraded heated tobacco device, expected to boost adoption and retention in key pilot markets. Early results indicate higher conversion and repeat usage, a promising sign for margin improvement as the business scales. With management targeting mid-teens NGP EBIT margins by 2027, Imperial’s deliberate pace of expansion appears to be balancing growth potential with disciplined investment.
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3. Cash Returns and Capital Discipline Lead the Sector
Imperial’s capital return program remains one of the strongest in the FTSE 100. The company generated £2.4 billion in free cash flow over the last twelve months, translating to 99% cash conversion, and returned a record £1.25 billion via buybacks during the first half. The board also reaffirmed its progressive dividend policy, which now accounts for roughly two-thirds of annual earnings, one of the most sustainable payout structures in the tobacco industry.
Management aims to maintain £2.2–£3.0 billion in annual free cash flow through 2030, supported by steady profit growth and disciplined reinvestment into reduced-risk products. Imperial’s combination of yield, buybacks, and stable leverage underscores its strategic focus on shareholder value rather than market share at any cost. For investors seeking both income and resilience, the company offers rare consistency in a sector still managing long-term structural shifts.
The TIKR Takeaway
Imperial Brands’ 2025 results reinforce its reputation for stability, strong cash flow, and disciplined execution. Growth in NGP, steady combustibles performance, and robust capital returns highlight a company focused on compounding rather than chasing market share. While the tobacco sector continues to face regulatory and volume headwinds, Imperial’s predictable earnings profile and high-yield strategy remain compelling.
For investors seeking steady dividend growth with upside from NGP expansion, Imperial is a textbook example of defensive value in an uncertain macro environment. Its long-term plan, moderate growth, high cash returns, and margin preservation make it a reliable anchor stock for income-focused portfolios.
Should You Buy, Sell, or Hold Imperial Brand’s Stock in 2025?
At roughly £31 per share, Imperial trades at 7.5x forward earnings and yields about 5.2%, one of the highest sustainable payouts in the FTSE 100. With a strong balance sheet, clear NGP momentum, and one of the most shareholder-friendly capital policies in Europe, Imperial screens as a Buy for investors seeking reliable cash flow and long-term compounding.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
