Imperial Brands backs FY outlook but warns Iran war could push up costs

(Sharecast News) - Tobacco company Imperial Brands backed its full-year outlook on Tuesday as it posted an uptick in first-half revenues, but warned that if the conflict in the Middle East persists, it could have a more meaningful impact on costs and consumer demand.

In the six months to the end of March, adjusted operating profit nudged up 0.6% to £1.6bn, while revenue rose 0.8% to £14.7bn. Reported operating profit fell 36.5%, reflecting the costs of the Delaware settlement and 2030 Strategy activities.

Tobacco and NGP net revenue was 1.8% higher at £3.7bn, while tobacco net revenue grew 1.5%, supported by "robust" tobacco pricing, which more than offset volume declines.

Revenue from the NGP (next generation products) segment was up 7.5%, with double-digit growth in AAACE (Africa, Asia, Australasia, and Central & Eastern Europe) and Europe, and market share growth in all three NGP categories.

Chief executive Lukas Paravicini said: "We have made a positive start to the execution of our evolved 2030 Strategy, combining consistent operational and financial performance with tangible progress on our transformation.

"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."

Imperial Brands said its expectations for the financial year are unchanged and in line with the guidance given last November and medium-term guidance set out at the capital markets day last March.

"While the conflict in the Middle East has resulted in a more uncertain macroeconomic environment, we have not seen a material impact to date," it said. "We will continue to monitor the situation. The longer this persists, the more likely there could be a more meaningful impact on input costs and consumer demand, including duty free. We remain focused on delivering full year results in line with our guidance."

At 0810 BST, the shares were down 0.6% at 2,711p.

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Imperial Brands