- Imperial owns the blu 2.0 vaping pen and Zone X nicotine pouch brands
- The firm expects to report first-half turnover being down on the prior year
- Sales of the company’s next-generation products in the US have struggled
Imperial Brands has reiterated its annual guidance for turnover and operating profit growth on the back of strong demand for next-generation products.
The Gauloises and Davidoff cigarettes owner told investors Thursday it was on track to achieve full-year forecasts, with net revenue expected to grow by low single-digit levels on a constant currency basis.
It anticipates a better sales performance in the second half of this financial year, bolstered by price hikes and normalising volume trends during the previous six months.
Turnover for the six months ending March is expected to be moderately down on the prior year, primarily due to the group transferring its Russian operations to local investors two months after Moscow’s invasion of Ukraine began.
But the company is forecasting a rise in sales of next-generation products, thanks to the multi-market launch of products like the blu 2.0 vape pen, Zone X nicotine pouch, and heated tobacco devices Pulze and iD.
Healthy demand for such products in Europe offset declining orders in the US, where the Food and Drug Administration issued marketing denial orders for many of Imperial’s myblu vaping goods last year.
Much of the cigarette industry is putting its hopes in new products such as heated tobacco and vaping pens as it tries to find new sources of revenue to replace traditional tobacco.
US authorities have been tougher on vapes than many of their international peers.
On Wednesday, e-cigarette maker Juul agreed to pay nearly $500million to settle claims by six US states where it had unlawfully marketed its products to minors, according to reports.
Imperial Brands still managed to grow its share of the cigarette and other combustible products market in the US, Spain and Australia, three of its priority areas. This offset declines in the UK and Germany.
It means that the company has seen market share remain stable for two years running after several years of decline.
Mark Crouch, an analyst at eToro, said: ‘A lot of firms tend to struggle when they pivot away from their core product line, but Imperial Brands is handling its transition away from tobacco pretty well.’
He added: ‘This isn’t a business that is about to embark on an extended run of rapid growth. But its stability is a virtue that is appreciated by many investors – that and its chunky dividend yield, of course.
‘Don’t expect Imperial Brands to blow the lights out any time soon, but another year of steady progress looks to be on the cards.’
Imperial Brands shares were 1.5 per cent lower at 1,849.5p on early Thursday afternoon, although their value has risen by about 10 per cent in the past 12 months.
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