Imperial Brands PLC (IMB) Earnings Call Transcript & Summary

Good afternoon, everybody, and thank you for attending this fireside chat with Imperial Brands. This afternoon with us, we have Stefan Bomhard, Chief Exec for now of Imperial Brands; and Lukas Paravicini, CFO for now of Imperial Brands. I'm Damian McNeela, Research at Deutsche Bank.

So we've just had the next iteration of what you expect to do for the 5-year plan. But I was wondering whether we could take before we get into the next stage, what are you most proud of achieving over the last 5 years?

Yes. I think, Damian, from my side, I think the most proud thing probably is if you look at the Imperial in the year 2025, we are now in a much better shape than we were in the year 2020. So I think we have very strong foundations also for the next 5 years driving forward, which I'm sure we'll talk about today. What on behalf of the team, I'm probably most proud of, if you really look at it, our core business is in a different shape than it was 5 years ago. 5 years ago, we were the #1 share donor in our top 5 markets. Today, we are holding share. We actually have gained in these top 5 markets 40-plus basis points in the last 5 years. So -- and we've invested in the brand equities of our brands, and we've invested in our sales capabilities. The second piece I would probably say is in NGP 5 years ago, I remember some of the earlier discussions. So it was clearly, I think a healthy dose of skepticism whether Imperial as the smallest player in our industry can actually play a role in NGP. And today, at our last half year results, we clearly have a competitive offer in all 3 categories. We always believe there would be 3 categories, and we're gaining share in all 3. So while there's still a long way to go, I still -- there is now real evidence that despite being the smallest company in the industry, we really have a role to play also in the industry conversion towards reduced harm product offers. And I think what I feel excited about is as well that the capabilities of Imperial to compete in this industry are materially changed. We have made significant investments in processes, significant investment in technology. And I think the quality of management team that we've promoted from within but also attracted from outside the tobacco industry into Imperial is something I think that will help us to continue to perform well in the industry going forward.

And how important is a cultural change, like you sort of pride yourself on the challenger mindset that you sort of brought into Imperial. How important has that been to sort of delivering the success you've seen?

Very. And thank you, Damian, for reminding. Look, reality is unfortunately, Imperial, if you go back in history, was the challenger of its industry. It came from being #16 to being #4 in the industry through acquisitions and having an attitude about being faster, more agile, heuristic. And then for a variety of reasons, it kind of lost that spirit. And I think I feel in the last 5 years, we found that spirit that was always a differentiating feature of Imperial in the industry. We found that back again. Yes, we are seen as a challenger industry. We're proud to be the smallest. We're not apologetic of being the smallest. And I think that is something that bodes well because I think this industry needed a challenger. And I think it's a natural role for Imperial to play. And I think today, while we're not perfect, to be clear, there's still way more to go. I do believe we're now today much more of the challenger. And with that has come a significant culture change inside Imperial. Today, if we look at our employee engagement scores that we do religiously every year, you can see people are proud to work for Imperial. People are proud to work for the challenger company inside this industry.

And I think a couple of weeks ago, you announced that you're going to be retiring as chief exec, and Lukas, you'll be stepping in to fill Stefan's shoes. Can we just sort of address any concerns that people may have about your departure and what that means for the strategy and the culture that you've sort of set down through the team?

Sure. Damian, look, it's -- let me start. It's -- we had some investors a bit like, okay, because they only saw me as the CEO of Imperial Brands. Look, I look at Stefan and for me, this is my 11th year as the CEO. And anybody who's been in that job just know this is a 24/7 job. So fundamentally, having driven Imperial in the last 5 years and having driven as a FTSE company before and having worked with the team on the strategy in the last 18 months very hard with Lukas, with Murray, with the rest of the executive leadership team and many people one level down. When we had the Capital Markets Day in March of this year, seeing the executive leadership team present the strategy largely on their own to the market, I felt this is the right time to step down because I felt I had done my job. I think the reality is what I'm super excited and you talked about team and culture before. I think what's great to see the business in a different place. We've now together, developed by the executive leadership team and beyond, laid out what we want to achieve for the next 5 years, a clear North Star, a clear compass. And what helped me make that decision and should also make feel investors very comfortable Lukas, who's going to take over from me, has been the partner in crime in the CFO role the last 4 years. We've worked this together. Murray, who will take over from Lukas and who is here in the room, he said he was one of the key architects of the original strategy and as you would expect, deeply involved in developing of the strategy 2030. So I think what the Board and we have done is about a clear understanding that as a large company, you have a responsibility to look at succession. And I think to be able to go to the market saying, with a clear strategy in next 5 years, here's the numbers we want to deliver. Here's the key strategic drivers of that. And here's the management team that will take it forward who actually is well known to investor. And I'm staying on board to help for the right time to do that. Look, I have to say I felt proud that we've achieved that together because I think it's an orderly leadership transition with a very clear proven strategy that we will drive further. The final point I would make, the hardest thing was to step away from Imperial because there's so much more to be done. But then my wife reminded me, look, there will always be a lot more to be done. And the reality is, therefore, I felt this is the right time to pass the baton over to Lukas, Murray and the rest of the leadership team.

And if I may, I think while Stefan will enjoy his well-deserved next steps, I think it is also important with all what Stefan has mentioned is this is an evolution to the point we mentioned, I also want to make sure we understand from my side and from Murray's side, we're excited to continue this journey. We've built big foundations. We know what works well. We have established at the CMD the next strategy. And we are excited to drive that execution for the next 5 years and unleash further value for shareholders. So it's really more an evolution than any changes that we should expect, please.

Yes. I think that's very clear. And I think if we then now start to look at some of the individual markets where you have been sort of successful in the last 5 years. If you start with the U.S., it's your biggest market. It's the biggest market for everybody essentially. You've started to deliver good share gains in recent years. Can you talk about some of the things that you've put in place to provide people with the confidence that it's a sustainable business proposition that you've got there now?

Damian, I mean I think if you start with the U.S., but it's a principle that applies to all our markets. Fundamentally, what have we put in place the last 5 years? A, we have invested more money in the brand equities of our key brands, especially at the premium end and the mid-price, the Winston and Kool. If you look at the level of investment less visible to investors, we don't break it out. I understand that. We have clear brand equities, clear understanding what are the target consumer of these brands, reinvested in A&P in these brands. Same way, -- we have invested in our sales force capability. We've increased our sales force in the U.S. by 40% since the start of strategy, which means we cover a lot more outlets than we would ever cover before. And it isn't just the quantity, it's the quality of our people. It's also the tools we've given to them. This will continue to drive performance going forward. And as you rightly say, Damian, you can see it in our U.S. performance. It's a business that has continued -- that has performed in the last 5 years with great net revenue performance, great profit performance and a nice drumbeat of actually either gaining share or actually gaining share in this context.

And given the sort of the pressure that the U.S. consumer is under, how do you see the sort of the market developing and what you need to do to make sure that you can continue executing?

I think what -- if you look at the U.S. What we see as a competitive advantage? What has allowed us to outperform the U.S. market? We have brands at every single price point in the market, which in a highly volatile market where consumers are continuously looking at different price points where they want to find the right brand for themselves, that has become a competitive advantage. But that's not just Imperial in the U.S. that is across the majority of our top markets. And I think that agility will serve us well. The brand equities we have at the individual price points today are stronger versus where they were 5 years ago. Now to be clear, the U.S. is a highly competitive marketplace. That doesn't mean that we will be perfect every single half year, every single full year. But again, we come to the point that we've said consistently, we look at our top 5 markets as a portfolio. And our ambition is to hold our share flat in our top 5 markets.

Yes. And sort of if we move on to Germany, I think it's probably been the most problematic market for you. It's turned around recently. Can you just talk about some of the things why it's taken as long as it has to turn around? And what gives you confidence or why shouldn't it continue to take market share because it's lost an awful lot of market share back to where it was?

Well, Damian, the exciting news that you asked us the same question last year in the same spot, then we're still losing market share in Germany. And my answer then was about, trust me, the must-win battles, the playbook we've defined for Germany is no different. It just takes longer to turn. The great news was that when we finally closed the full year fiscal year '24 after this conference in September, we actually did hold share for the first time with share was up 2 basis points. At the half year results that we reported in mid-May, our share in the first half year was up 60-plus basis points. So I told you it would take the longest and finally has turned as well. Why did it take longer? Simple. The years of underinvestment in Germany were longer than many other places because in Germany, it's still a very open market. So it still means meaningful A&P investments, meaningful investment in sales force. So it took us longer to turn that around. The other thing also is the investment in better capability in the sales force took longer versus the U.S. where actually you can expand quite quickly and you can change work practices quite quickly in Germany because of labor regulation that took longer. So it's great to see to turn around. On your sub-question about can now Germany wonderfully fly on at shares? I see some of our competitors are here in the room. Look, it's -- to be very clear, it's a highly competitive nature. And we know in our industry is we have never set an ambition to gain market share. We set holding market share is what our strategy is based upon. We will always continue to drive to try to take market share, but we will always do this in the balance about what does it cost to take market share? What's the level of investment? What is the right thing to do. But I think what investors should feel very comfortable with as we're in year 5 of our current strategy. Now every single market in the top 5 has shown share growth at one point in time in this period. Germany is not the final one that actually has shown share growth.

Yes. No, no, it's very clear. And really impressive performance. In the U.K., I think the category dynamics are slightly different to other places. Can you just sort of talk about -- a little bit about what's going on in there and then perhaps some of the things that you're doing perhaps around Paramount as well?

So I think in the U.K., we have to remember that the excise increases, which is every year is related to inflation. So what you have seen actually in the last 2 years is a significant increase of excise tax, exacerbated also by the accelerator on fine cut tobacco to level it off with the normal combustible business. And that has taken obviously an impact on the consumer, it takes a while. If you step back, I would say Imperial has actually managed very well that transition in the first few years of our strategy, we actually gained market share. And when these increases came, we started focusing more on extracting value. Despite this inflationary impact, we actually were able to pass all the excise increase to price. We even took a further price this year. So that will take a bit more time to normalize. But let's be clear, within that context, I think Imperial shows that we can still take value of that market. That market has always been a bit more difficult than the others, and we have catered for that. It's only 8% of our total business. So we are very happy with the U.K. in terms of what we can do, and we realize it is a more difficult market.

Yes. And perhaps another market that's been slightly more challenging of late is Spain. Can you just talk a little bit about the sort of near term?

I think Spain is a very exciting market. So I do understand the U.K. is -- has a bit of more difficult framework. Spain is a very different story. I mean, Spain has been a market where we haven't been able to take prices in -- for many years because of the price point they were, where the competitors were with inflation, that price point has moved, and we have been able to take prices. It's a very affordable market. We have wonderful dual brands, local brands, which are very powerful. We have also been able to take more pricing. So it's the third largest market by volume. So it is an exciting market. What you have seen in the last 6, 7 months is what we typically do, we balance off our capability of share gains with value. And hence, in this case, after taking several years of market share, we decided to price ahead of the competitors because our commitment to market share is at the aggregate of the top 5 markets, not by individual markets. So we thought and that was the right decision to go ahead of the competition, which now allows us to monetize that benefit. Now to be fair, when we then saw that some of the competitors might not have followed in the same expectation, we very agilely went back and adjusted a few of the prices, and you see already the market share normalize again. So we will see the market share having taken a hit this year. That will change, but it was well decided because we wanted to realize value for our shareholders.

Yes. Yes. That's very clear. And last major market, Australia, some people point to it as the have not to regulate tobacco industry there. But I mean, can you just talk about what you're doing to try and sort of mitigate some of the pressures coming through from changes in excise and change in regulation?

So I would always say there's not much use at this front. It has been a difficult market from the framework, from the regulatory framework. Today, probably 30%, 40% of the combustible business is illicit, 99% of the NGP business is illicit. So that's a framework. But again, I would go back and say what we can control is actually extract significant value out of that. And I give credit to our teams, which work really under very difficult circumstances to have been able to continue to keep Australia at the top 5 markets. It is a very valuable business for us. And I think it is a good example that even with this difficult framework, it is a market where we can extract value, and we are very good at managing share and value over the last few years. We will continue to do that going forward, and we're very proud of Australia.

On a slightly more philosophical point, do you think you can reverse or take back some of the illicit share that they've taken?

To be honest, I think you would -- in the case of Australia, you would need a better enforcement for that. As soon as you get -- let's be clear, Australia is exciting also because to be fair, the underlying reason why the consumer smokes is nicotine. That has not changed. Actually, the nicotine consumption remains very stable. So to your point, if you have a better enforcement on the combustibles, you would see a better or a less dramatic loss of volume in our case. But also what you've seen lately is actually they opened the NGP business in the pharmacy without prescription, which is still at the very infant nascent opportunity for us. But it does show you that the government is seeing that their policy might need some adjustments for it to work because right now, financially, it's not a business for them. They don't get the taxes they wanted. And from a health point of view, they are not helping smoke or getting off smoke.

Yes. I think in answer to your -- my first question, you sort of said one of the things we're very proud of is the sort of putting the NGP portfolio back into Imperial across all 3 platforms. Can you just talk about some of the innovation that you showed people at the CMD coming out of the NGP platform?

Sure. I mean I think what -- Damian, what I think is exciting, you can see the frequency of innovation that we bring to the market, if you look at the last 12 months, it's meaningfully different versus where we started, because you can clearly see, if I go across the 3, if you start off with vaping, we were the first one of the established tobacco players to launch a 1,000-puff disposable product. We have continuously upgraded our products. We have also adjusted to the disposable ban in a number of European markets. And we are logically looking at innovation that will come to the market in the next 12 months. If you look at heated tobacco, we announced at the Capital Markets Day, the launch of Pulze 3.0. So in a short period of time, we've gone from Pulze 1.0 to Pulze 2.0 now on to Pulze 3.0 in what is a highly competitive environment, and we were the second of the industry players who launched a nontobacco-based stick product in the heated tobacco market, which given that we are the smallest, I think, gives you some evidence about that we've really changed our innovation approach. And a modern oral nicotine, to be clear, for more than a year, we were operating in the U.S. as the only one who offered, I call it, the euro or Nordic style more moist product also with higher nicotine levels because we've done our homework. We found a partner to actually bring what we think is a very differentiated product to the U.S. consumer. So put it this way, we're not here to -- we have a philosophy to announce our innovations to our trade partners first, not to our investors first. But assume that on NGP, we've built now the capabilities between our innovation centers, our partnerships and the key consumer insights and the marketing capabilities to have a continuous flow of innovations that is relevant to the consumers that we target across all 3 NGP categories.

Yes. And I guess on the Pulze 2.0, can you sort of provide a little bit more insight into the consumer that you're specifically going after? Because I think, obviously, the category is developing.

Sure. The reality is we are -- at the half year end last year, we shared we're gaining market share in heated tobacco, which, as we all know, is a highly competitive industry. So the data point shows we must be doing something right. Otherwise, we won't gain share. But to your point, so what is that in the compass of being a competitive category. But happy to share. Fundamentally, we've done a lot of work of really understanding what are the unmet consumer needs about heated tobacco. And what we identified, we have wonderful competitor set. At the same time, we identified that as technology has become more complicated about -- and that's all for good reasons. There is a consumer out there who actually looks for a product, a device that is easy to handle, simple, allows them a long usage of the device without recharging and it's simple to operate. And the consumer who is also looking for a good value for money proposition with great tobacco flavors. And I think we've honed in on this consumer because I think that was a segment that we felt was underserved in the marketplace. And the consequent market share gains give us evidence and the research that we do is that our proposition does actually appeal to these consumers.

I think you mentioned it in the prior answer, but modern oral, I mean, it's a category that everybody is getting excited about. There's lots of growth potential out there. I think OND now has got 5% -- sorry, not OND, Zone has got 5%. And I mean can you just talk a little bit more about the differentiated proposition that Zone has got? You touched on it a little bit, but what is it that really appeals to the U.S. consumer about Zone?

Sure. I mean I think what's important, we have always believed for the last 5 years, and it's one of the things that clearly start with the consumer. Very important. The industries should not dictate what consumers want. The journey for consumers is hard enough to get out of cigarettes. Our job as an industry, including Imperial, is to put the best offers in front of them to allow them on that journey. And in the U.S., to describe that journey, in the U.S., because you have historically a sizable oral nicotine market in the U.S., you had consumers looking for alternatives just to go into modern oral nicotine, and that market grew. And what we did in '23 and '24 is study really what are the key met consumer. We spent as an executive team, we had a meeting in the U.S. where the entire executive team came out and actually spent time with consumers, competitive users, consumers of also cigarettes, why they have not switched. And in that way, with our significantly upgraded marketing and research capability, we identified that there was a need, there was a part of the market that felt underserved. Now to be clear, the European market is much more about moist products. So it wasn't rocket science to figure out if that's -- the preferred consumer offer in Europe, wouldn't there be a segment in the U.S.? And I think then we fundamentally had a good idea what was the unmet consumer need. We then kind of said, okay, what is the ideal product that we bring to the U.S. And then we kind of went out with that, starting with the consumer mindset and look, who had a PMTA submitted for products that would fit that brief. That's how we ended up with the company where we purchased the rights for the U.S. and launched it in the market in February 2025. So I think it's a beautiful example of what challenger mindset means for Imperial in the NGP field. Start with the consumer, understand where you can make a difference, work with partners and then bring it to the right marketplace.

And how do you feel about the level of competition because there is an increasing amount of competition entering into the category in the U.S. How do you feel you're positioned to deal with that?

That's why I come back to proud to be the challenger, proud to be the #4. Look, this industry has been competitive for a long period of time. Take it for somebody who worked for Procter & Gamble and Unilever. I mean, it's amazing the level of competition in this industry and with good competitors, yes. So modern oral is no different to the combustible business. And I think given the growth that modern oral nicotine has seen in the U.S. from day 1, we knew that competition would be there. I mean, to a certain extent, we were amazed how long it took any of our competitors to actually get a product that would be more similar to where we have been. But -- and this game will go on for a long period of time because -- and we welcome it. Ultimately, we're all, from a purpose perspective, doing the right thing. If we compete with each other to continuously improve our products, the likelihood that we put products and brands in front of consumers that are -- they find attractive to switch away from traditional oral nicotine or cigarettes to these products, that's the right thing for shareholders, that's the right thing for society. And the great news is today in year 2025, investors and regulators can see Imperial is really dedicated and invested in this area, and there's money to be made for our shareholders as well.

Well, that leads us nicely into the next question, which is around NGP profitability. You've made a significant inroad in reducing the losses that you're making. I mean, what are the steps that need to happen to sort of transition into being profitable NGP and any particular markets or categories that you think will be crucial in helping you achieve this?

So I mean, going back again at the bigger picture, we have committed to a meaningful business and I think Stefan was very clear from the inception that a meaningful business cannot come at the cost of profit. So it has to be meaningful and also profitable. And I think we have shown good progress over the last few years on how we actually constantly reduced the losses significantly. Even at this half year, again, we have further come down on the losses. And I think at the CMD, interesting, we have also shared a bit more on what actually the NGP business, the different categories can achieve in terms of gross margin and shown that they can be attractive from an industry point of view, but also attractive from an NPL point of view as soon as we reach scale. Now clearly, what is important to us is balancing of the growth rate with the speed to which we reduce to 0 the losses. And I think we are balancing -- we want to reach the breakeven through growing through profitability, not by stopping the business. We have grown double digit in the last 2 years. We committed to another double digit this year. And so I think we have a good sort of balance of growing the business quickly, reducing the losses. What time frame is probably more an arbitrary discussion, what is important is the trajectory in our meaningful business to build a profitable NGP business.

Yes. And I guess underpinning some of the progress that you've made in profitability across the group is the investment in operations, systems and efficiency. We're sort of at the start of a multiyear ERP rollout. Are you able to sort of provide any insight into the level of cost savings we might expect from that?

So I would go back again and where we started, I was a bit surprised when I found 60 ERP still being used. I think we have every ERP under the sun in our company. And so it became quite evident that if you really want to unleash or unlock potential, you needed to sort of roll out an ERP. We started 2 years ago. So we are not just at the starting point. We actually started 2 years. We have one big cluster market going live very well. So we have faced that over the next few years, and we see benefits in terms of standardization, scaling up efficiencies, better decision taking and much more extraction of value. But I would step back and look at what we said at the CMD in terms of how we can further invest now that we have brought the challenger mindset. We have also brought a lot of people from outside with fast-moving consumer goods. How do we actually unleash their full potential by delivering better processes, better technology and better data. I would say the ERP is just the starting point, is one of the pillars to how we see that one part of that investment we committed in the CMD will deliver a lot of self-help in terms of much more efficiency and better usage of data going forward. That is part of how we see the future delivering value.

Yes. I think if we then sort of look about what you need to do for the rest of the year in terms of deliver an acceleration in the second half, to hit the sort of the guidance you've put out there. Can you sort of talk about the things that you're expecting to achieve to get us to that guidance?

Yes. I think this is a valid question in terms because we obviously have a different first half. But the second half, it's not very different from the last 2 years where we had the same phasing. And to be fair, the answer is also not much different from the last 2 years in the same, there's nothing new here in terms of most of this will deliver by 2 things. One is we take a lot of pricing at the beginning and then that will flow through in the second half and you have ongoing gearing. So nothing new to see here. We're actually slightly better off than last year at the half year. So the delta to the full year is not very different. And we're very committed to delivering the guidance.

Yes. And I think one of the sort of really important things for investors over the last couple of years has been shareholder returns. Can you talk about the level of conviction you've got in being able to sustain the cash flow to support your dividend and what is now an evergreen share buyback policy?

So again, I think we were proud and it's part of our commitment to have an evergreen share buyback for the next 5 years. That means every year for the next 5 years, we are committed to give a share buyback. And I don't think there are many companies out there who will give you that commitment. And when we commit to something, there is quite a lot of commitment and work to make sure that we can deliver that. And I think if you go back, our commitment comes from 2 parts. We have given an AOP growth guidance of 3% to 5% over the 5 years, which is a very achievable growth rate, which is also the good balance between investing in the future, but also extracting value in terms of profit and cash. If you pair that with our very disciplined cash usage, which is guided through the capital allocation, that gives us the confidence that the combination of both will be able to deliver that share buyback and through the share buyback, very important to us is a high single-digit EPS, which is really what we're looking for.

And what's the difference do you think in the messaging between a normal buyback and an evergreen buyback? And what investors should take away from that?

It is important for us. And we remember at the beginning, there was a lot of discussion you should come out and do the share buyback. Why don't you do the share buyback. And we felt that we want to go through the capital allocation, making sure that we get our business right, we invest sufficiently in the business without going overboard. It's still an organic strategy. It's a bolt-on M&As where possible. Delever our balance sheet, have a strong balance sheet, and then we can do that. But we believe that one of the beauties of this -- of our business is that we will remain a combustible business for many years to come while we build a meaningful NGP business. That is hugely cash rich. And we believe that commitment should show you that there is -- we are confident in how we run our business, in the health of our business. And that, I think, is a key value driver for the next 5 years.

Yes. And then given the importance of combustibles, how do you feel about the sort of the change in personnel at the regulators, principally in the U.S., but also some of the potential changes in regulation that are coming down the track in Europe?

Listen, I mean, I think the regulation is something that we have lived with for the last 40 years. I remember when I joined this company, everybody talked about regulation and everything changing, and I sort of really got a bit scared at the beginning. Then I realized there's a lot of noise, but actually, the trend is quite stable. Yes, there are lots of changes in the U.S. But to be fair, if you step back in the U.S., the current administration is probably more pro business, less regulation and that bodes well for us. The U.S. is also very well known for being a rule-based regulatory body, which have to consider unintended consequences. You have a legal avenue as well. So I think that won't change. So that is -- bodes well for us. And in Europe, you see actually quite a stable environment as well. It does only go in one direction, but it's quite stable. You have to get the agreement of 27, 28, I forgot the number now, but 28 member states all have to agree to that. So it is something that we are good at managing. It's something we have experience, et cetera. I don't think that is something that will change our guidance for the future.

Do you think there's been any sort of step-up from this administration in terms of enforcing the regulation in the U.S.? I mean there's been some examples of their sort of seizing things and...

Listen, I think the -- there is the right messaging at the top. I mean that the government at the federal level, there's a lot of intent. And I think clearly, they obviously have a view on China, et cetera, and that should actually bode well for us. Have we seen a lot of actions following that good intent? Not yet, okay? I think that we have to be realistic, and we don't build in our future plans, neither short term nor medium term, any significant change to that. What we do see, and I think that is very important, there is a significant change at state level. And so if you take Louisiana, which is a state we like to take because it's probably most advanced, they have passed legislation whereby actually all products, vape products sold in the state have to be on a positive list. Unless you are not on that list, you cannot be sold. And the enforcement is much better. And the enforcement is easier because it's a much more smaller geographic dimension. Nowadays, there are more than 50 states in the U.S., which are going through the same legislative process. If not all, but many of those come through, you would see an improvement in the volumes.

Of your vape business or of your combustible...

combustible because it will limit the number of illicit.

Yes. Okay. So I think we're drawing towards the end, but perhaps I might sort of ask you, Stefan, to sort of comment on the business that you've left behind very briefly -- or you're leaving behind. And then Lukas, perhaps what you're most excited about taking on the sort of the CEO role.

Sure. I mean I think it's a different business today. I think it's now -- this business stands on much stronger foundations than it was 5 years ago. That relates to its core business, the core combustible business, and it also relates to the NGP business. And I think the culture point that you said before, it has now a much more clearly defined role within the industry. It's a challenger. It has a differentiated strategy that I think is a great way to pass on the baton over to Lukas to take it to the next level. But there is also, I would say, a lot of things left to be done inside this company.

And from my side, I'm hugely excited with the opportunity. I'm grateful also that I get the base, which is much better than we had 5 years. I'll also be very honest with you. I mean, as much as I'm prepared, as much as I've worked in this business, this is a different role. It's different to manage a financial team where it's just a very logic numbers based to go to a CEO. Stefan and myself have discussed this at length, and he will stay with me for as a mentor. So I'm very conscious of that big step change that means. But I'm also excited because I do believe, like Stefan said, we have had a good run, but there is still more to come. I think our view is it's not about what we have done in the past. For those who have invested in Imperial, we need to make sure that they get the next round of value creation. And I believe there is -- if we stay close to the consumer, which we have started, we can build distinctive brands, we can accelerate innovation, and we can further harness value out of the combustible, which is the pillar #1. Through the same methodology because we know our consumer better, we can deliver a meaningful NGP business. I'm hugely excited also with the team that Stefan has left behind, not just the executive team, which is a phenomenal team, which owns the strategy together, but the larger team that we have assembled. And I'm excited, and this comes back to my heritage as a finance manager, is that the value that we can create does show back in the share buyback and the dividend yield.

Okay. Well, I think we're just about out of time. So thank you, Stefan. Thank you, Lukas. Thank you, everybody.

Thank you very much.