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igarette and vape-maker Imperial Brands said that it expects to meet expectations this year with rises in profit and revenue, but warned that its next-generation products had taken a hit in the US.
The business said that it was “on track to meet full-year expectations” in a short update to the stock market on Thursday morning.
Revenue and operating profit will grow this year, it said, despite remaining flat in the first half.
But the business warned that there had been “uncertainty” in the US which led sales of its next-generation products to fall in the first half.
It came after the US Food and Drug Administration (FDA) issued a marketing denial order for several of Imperial’s myblu vaping products last year.
“First-half NGP revenues are expected to be ahead of the prior period, driven by strong growth in Europe, more than offsetting declines in the US, driven by uncertainty caused by the marketing denial order for myblu,” it said.
Europe is Imperial’s biggest market and whilst market share gains elsewhere are currently compensating for declines in the UK and Germany, this is something to keep an eye on
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 products to replace traditional tobacco which causes cancer.
US authorities have been tougher on vapes than many of their international peers.
On Wednesday, e-cigarette maker Juul agreed to pay nearly half a billion dollars to settle claims by six US states that 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.
“Focused investment in our priority combustible markets continues to support the stabilisation of market share.
“We are consolidating the strong gains achieved last year with aggregate share in our top-five markets at the half year expected to be at a similar level to the prior period,” it said.
Derren Nathan, head of equity research at Hargreaves Lansdown, said: “As pressure mounts on consumers, tobacco’s resilience continues to hold up.
“Imperial Brands is flexing its pricing power further this year which it is confident will help it eke out modest revenue and profit growth.
“But with profits flat in the first half, even modest full-year growth expectations mean there’s a lot to deliver in the second half.
“Europe is Imperial’s biggest market and whilst market share gains elsewhere are currently compensating for declines in the UK and Germany, this is something to keep an eye on.”
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