Imperial Brands has warned that a protracted conflict in the Middle East could impact input costs and consumer demand, including in the duty-free channel, but the tobacco giant has reiterated its full-year guidance.
Announcing its half-year results on Tuesday, the Bristol-headquartered maker of Golden Virginia said tobacco pricing “more than offset” cigarette volume declines and was expected to provide a greater benefit in the second half.
Underlying revenue rose 1.8% to £3.7bn, while first-half adjusted operating profit reached £1.64bn, up just 0.6% on a constant currency basis for the six months to the end of March, driven by strong demand in Europe and emerging markets.
Imperial confirmed it had completed an £809m share buyback during the period, as part of a wider £1.45bn scheme, and increased its interim dividend by 4%. It also said its transformation strategy was “on track” to deliver £320m of cost savings per year by 2030.
Lukas Paravicini, chief executive, said: “In combustibles, robust pricing momentum has continued to deliver low single-digit growth, at constant currency, in both net revenue and adjusted operating profit.
“In next generation products we continue to grow market share in all three categories. We have seen particularly strong growth in heated tobacco, following the rollout of our Pulze 3.0 device.
“Our modern oral portfolio has grown strongly in European markets, while in the US we have grown volume share in a competitive market.”
Looking ahead to the second half, Imperial said it would “continue to monitor” the situation in the Middle East, which had created a “more uncertain” macroeconomic environment.
“While tensions in the Middle East have led to a more uncertain macroeconomic environment, we continue to be confident of delivering a step-up in adjusted operating profit growth, in line with our full year guidance,” Mr Paravicini added.
Imperial said it expected to generate free cash flow of at least £2.2bn in the 2026 financial year after 2030 Strategy costs and the first instalment of the Delaware settlement, a payout of $251.5m to rival cigarette maker Reynolds American by its US subsidiary ITG Brands.
“Looking beyond the current fiscal year, we remain committed to the plans and medium-term guidance we provided in our 2030 Strategy in March 2025 to generate another five years of sustainable growth and long-term shareholder value through a progressive dividend and an evergreen share buyback,” the company added.
