Imperial Brands Plc, the maker of Winston and Gauloises cigarettes, forecast an acceleration in second-half earnings, helped by price increases.
(Bloomberg) — Imperial Brands Plc, the maker of Winston and Gauloises cigarettes, forecast an acceleration in second-half earnings, helped by price increases.
Volumes declined in the first half of the year as consumers returned to pre-Covid buying patterns and after Imperial exited Russia last year, the UK tobacco company said Tuesday.
Gains in the US, Australia and Spain offset declines in Germany and the UK. Imperial said it’s still on track to deliver faster profit growth in the second half, in line with its previous guidance.
“We expect the pricing picture to improve in the second half because of the rollover effect of the price increases from the first half,” Chief Executive Officer Stefan Bomhard said on a conference call.
Bomhard is now in the third year of a five-year turnaround plan, and the CEO has set a goal for an acceleration in earnings growth. The forecast is for average growth of a mid-single digit percentage at constant currencies. The company repeated guidance that this year growth will be at the low end of the target.
The stock was little changed in London Tuesday morning. First-half adjusted operating profit was similar to last year on a constant currency basis.
Imperial has been lagging its larger rivals in the race for smoking substitutes. The loss from next-generation products rose 33%, as expected, Imperial said. Such products represent about 3% of Imperial’s overall revenue excluding its distribution unit Logista.
Philip Morris International Inc. got about a third of revenue last year from smoking alternatives, while British American Tobacco Plc got a tenth. BAT replaced its CEO Monday after the stock lagged rivals.
Revenue dropped 1% on a constant currency basis, hurt by the company’s exit from Russia.
The company raised its interim dividend 1.5% year-on-year.
Bomhard said Imperial will distribute £2.3 billion to shareholders in 2023 through dividends and share buybacks.
(Updates with next-gen comparisons in eighth paragraph)
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