- Imperial Brands noted that tobacco sales were boosted by price increases
- Demand for the next generation brands has been supported by product launches
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Golden Virginia and Gauloises owner Imperial Brands is on track to achieve annual expectations, with first-half profits expected to be higher than expected.
The FTSE 100 company expects net revenues from tobacco and ‘next generation products’ to rise by low single digits at constant exchange rates for the 12 months ending September.
Imperial said tobacco sales were boosted by price increases and market share gains in priority markets such as Spain, Australia and the US, “largely offsetting” declines in Britain and Germany.
Development: Imperial Brands has invested significant amounts in developing non-tobacco alternatives as part of a five-year strategy launched in 2021
Meanwhile, demand for its vape, heated tobacco and oral nicotine brands has been supported by product launches such as the new iSenzia non-tobacco heat stick.
Imperial also expects adjusted operating profits to rise ‘close to the middle’ of the mid-single digit range, helped by lower losses in the NGP division.
The Bristol-based group has invested significant sums in developing non-tobacco alternatives as part of a five-year strategy launched in 2021 under CEO Stefan Bomhard.
To date, the company’s NGP brands, including Pulze, Skruf and Blu, have a presence in the US and more than two dozen European territories, although they represent a fraction of Imperial’s total sales.
For the first half of the fiscal year, Imperial expects sales of these products to grow at a “mid to high teens” rate.
The company believes that operating profit for the same period will be higher than the previous year, thanks in part to a strong performance from its Spain-based distribution business Logista.
Imperial added that it had bought £604m of its own shares as part of a £1.1bn buyback programme, which the company aims to complete ‘by’ October 29.
Mark Crouch, market analyst at eToro, said: ‘Generous shareholder returns have long been the focus of the tobacco giant, in the form of share buybacks and a hefty dividend.’
But he added: ‘Doubts still remain about a sector facing an uncertain future.’
‘With the continued decline in the number of tobacco smokers worldwide, multiple threats of government regulation and relentless health campaigns determined to phase out smoking, it’s easy to see why.’
A bill is going through the British Parliament that, if passed, would ban anyone born after 2009 from buying cigarettes, which would be one of the strictest anti-tobacco laws in the world.
It would also introduce new restrictions on vaping products, including vape flavors and the way they are marketed and displayed in stores.
Imperial Brands shares were 0.3 per cent higher at £17.37 late on Tuesday morning, but have fallen by around 30 per cent over the past five years.