Half Year Results Statement

PERFORMING AND TRANSFORMING, IMPROVING CASH AND RETURNS

Financial summary

1 Tobacco & NGP net revenue is reported revenue less duty and similar items, sale of peripheral products and Distribution (Logista) gross profit.

2 See page 3 for the basis of presentation and the supplementary section at the end of the financial statements for the reconciliation between reported and adjusted measures.

3 Constant currency removes effect of exchange rate movements on the translation of the results of our overseas operations.

Lukas Paravicini, Chief Executive

“We have made a positive start to the execution of our evolved 2030 strategy, combining consistent operational and financial performance with tangible progress on our transformation.

"In combustibles, robust pricing momentum has continued to deliver low single digit growth, at constant currency, in both net revenue and adjusted operating profit. In next generation products we continue to grow market share in all three categories. We have seen particularly strong growth in heated tobacco, following the roll-out of our Pulze 3.0 device. Our modern oral portfolio has grown strongly in European markets, while in the US we have grown volume share in a competitive market. 

"Despite the impact of one-offs our first half operational performance has driven consistent, strong cash flows, which underpin ongoing investment in growth initiatives and capital returns to shareholders. We are on track with our £1.45bn share buy back and the interim dividend has been increased by 4%. 

"While staying laser-focused on in-year delivery, we are also making progress on self-help activities to drive efficiency and our long-term transformation to build the capabilities which will underpin our future growth. We are making good progress on focusing our supply chain footprint and have begun implementing our strategic partnership with Capgemini.

"Looking ahead to the second half, while tensions in the Middle East have led to a more uncertain macro-economic environment, we continue to be confident of delivering a step-up in adjusted operating profit growth, in line with our full year guidance.”