Imperial Brands' Evolve 2030: Deliberate Value Over Volume, Transformation on Track

H1 FY26: Strong pricing, NGP scale, and strategic efficiency despite temporary headwinds; guidance reaffirmed.

IMB.L · Earnings Call · 2026-05-12

Imperial Brands' H1 FY26 results are a study in deliberate trade-offs. The company chose to cede volume share in favor of value, a stance that CEO Lukas Paravicini frames as a value share approach: “This reflects a deliberate choice to prioritize value over low return volume.” — Lukas Paravicini, Chief Executive Officer · 2026-05-12 In the five priority markets, aggregate share fell 60 basis points, but pricing more than offset volume declines, delivering low single-digit tobacco net revenue growth. The CFO Murray McGowan reiterated confidence: “We are confident of a step-up in performance in H2 and remain committed to our previous full year guidance.” — Murray McGowan, Chief Financial Officer · 2026-05-12

As we said at the last year's CMD, share is important, and we will not return to the period before 2020, where we were consistently the industry #1 share donor. Across all our major markets, pricing ladders are becoming more stretched. This means the gap in industry gross margins between the premium segment and the deep discount is growing. It's a simple point, but it's worthwhile emphasizing. Not all basis points of market share are equal.
Lukas Paravicini, Chief Executive Officer · 2026-05-12

This philosophy is not new. A year ago, Paravicini articulated the same shift: “We have clearly moved away from being the biggest donor of market share in the industry, if you go back 5 years to where we are today.” — Lukas Paravicini, CEO · 2025-11-18 The consistency suggests a deeply embedded strategic pivot rather than a short-term reaction.

NGP: Building Scale and Strategic Discipline

The NGP story is one of resilience despite one-offs. Excluding promotional timing in the U.S., NGP net revenue would have grown double-digit, and total NGP losses would have declined year-on-year. The decision to exit the U.S. vapor category, with a legacy myblu device, should reduce losses in H2. Meanwhile, duty drawback remains a potential tailwind, with management expecting meaningful contribution in FY27. As Murray McGowan had previously emphasized, "We're really clear that we want to build a sustainable, scaled next-generation products business that generates both profit and cash and contribution to the group." “We're really clear that we want to build a sustainable, scaled next-generation products business that generates both profit and cash and contribution to the group.” — Murray McGowan, Head of Strategy and Corporate Development · 2025-11-18 The U.S. oral nicotine (Zone) grew volume ahead of the category, and excluding one-off promotions, net revenue rose 20%. European modern oral and heated tobacco also gained share across all three categories. The company is deliberately selective about market entry, focusing on where categories are established and it has a route to market.

Transformation: Efficiency and Long-Term Growth

The sustainable value story extends to cost discipline. The company is on track for £320m of annual savings by the end of the strategic period, with progress on factory rationalization (Langenhagen and Taiwan) and a new Capgemini partnership. These actions are expected to deliver £25m of manufacturing efficiencies in FY26 and £100m in overhead reductions once the factory exits complete. The CFO noted, "We have hit the ground running in our long-term partnership with Capgemini." “We have hit the ground running in our long-term partnership with Capgemini.” — Murray McGowan, Chief Financial Officer · 2026-05-12 Capital returns remain strong: a 4% dividend increase, an ongoing £1.45bn buyback, and cumulative returns of £11.5bn since FY21. The temporary headwinds—U.S. tariffs, Australian volume declines, and promotional timing—are expected to reverse in H2, supporting the reaffirmed guidance of 3-5% adjusted operating profit growth and at least high single-digit EPS growth. With leverage at 2.4x and a clear strategic roadmap, Imperial Brands is executing its transformation while navigating a challenging macro environment with a disciplined, value-first mindset.