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Imperial Brands PLC on Wednesday backed annual guidance and added it forecasts a ‘broadly flat’ first-half revenue performance, with tobacco market struggles in Europe offset by progress elsewhere.
The company owns the Rizla rolling papers brand, Gauloises cigarettes and the Blu e-cigarettes range.
Imperial said net revenue for the six months ended March 31 is expected to be broadly flat annually on a constant currency basis, in line with expectations.
‘This reflects a weaker tobacco performance in Europe, which offsets growth in other regions. Europe's performance has been driven by the return to pre-Covid purchasing patterns as Northern Europeans resume international travel, as well as price phasing in some markets. However, price increases during the latter part of the first half will support a stronger revenue performance in the second half,’ the FTSE 100 listing explained.
Interim adjusted operating profit is expected to grow by around 2% on a constant currency basis, benefiting primarily from reduced losses in the Next Generation Product range, which includes Blu. The tobacco performance, meanwhile, will be weighted to the second half.
In the first half of financial 2021, it reported net revenue of £3.57 billion. For the whole of that year, it reported revenue of £7.59 billion, as well as an organic adjusted operating profit of £3.57 billion.
Imperial said it was on track to deliver full-year results in line with revised guidance issued in March. It forecasts a full-year net revenue performance ranging from flat to 1% growth on a constant currency basis. It expects adjusted operating profit growth of around 1%.
‘Focused investment in our top-five combustible markets, which account for around 70% of adjusted operating profit, has driven an increase in aggregate market share for those markets. Gains in the US, UK and Australia more than offset declines in Germany and Spain. These share gains were achieved while maintaining strong pricing discipline, and overall tobacco volumes are in line with expectations,’ the company said.
At current exchange rates, it forecasts a 2% foreign exchange hit to interim earnings per share, and 1% for the full-year.
In addition, Imperial Brands said consumers have responded positively to the pilot launches of its Pulze heated tobacco system in Greece and the Czech Republic and improved consumer marketing for its Blu vapour product in the US.
‘We are making good progress against our strategic objective of building a sustainable, consumer-centric Next Generation Product business and we will provide an update on our next steps at the interim results. First-half NGP revenues are expected to be slightly ahead of the prior period, driven by growth in Europe,’ the company said.
In addition, it said it is continuing talks with a ‘local third party’ about transferring Imperial's Russian assets and operations.
It plans to report results for the first half on May 17.
Shares in the company were up 2.6% at 1,658.65 pence each in London on Wednesday morning.
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