Tobacco giant Imperial Brands has said it is on track despite weak sales in continental Europe.
The Gauloises and Rizla owner, which is headquartered in Bristol, said gains in the UK, US and Australia had helped to offset the impact of declining sales in Germany and Spain in recent months.
It comes three weeks after the company said it was in talks to offload its Russian operations, amid the ongoing invasion of Ukraine.
Imperial Brands employs 1,000 staff in Russia in its sales and marketing operations, and its factory in Volgograd. The business has said it had begun negotiations with a local third party about the transfer.
In a trading update, Imperial said its tobacco sales volumes have been in line with expectations as it continued to grow its vaping and heated tobacco business, titled Next Generation Products (NGP).
The group said customers have “responded positively” to trials of its Pulze heated tobacco system in Greece and the Czech Republic, and improvement of its Blu vaping product in the US.
It added that NGP revenues for the first half of the year are set to be “slightly ahead” of the same period last year after growth in Europe.
The FTSE 100 firm said: “We are on track to deliver full-year results in line with our revised guidance issued on March 15, with expected full-year net revenue growth of around 0-1% on a constant currency basis and adjusted operating profit growth of around 1%.”
The company added that first-half group adjusted operating profit is expected to grow by about 2% on a constant currency basis.
However, total revenues for the first half are due to be roughly flat due to a “weaker tobacco performance in Europe”.
Imperial said: “Europe’s performance has been driven by the return to pre-Covid purchasing patterns as northern Europeans resume international travel, as well as price phasing in some markets.
“However, price increases during the latter part of the first half will support a stronger revenue performance in the second half.”
Matt Britzman, equity analyst at Bristol-based financial services firm Hargreaves Lansdown, said: “Key for any tobacco company in today’s world is how they’re going to transition away from the increasingly unpopular classic tobacco products and build out an offering of next-generation products.
“Imperial Brands pretty much scrapped their plans and started from scratch a year or so ago when the new strategy was announced, focusing now on heated tobacco products in Europe and its Blu vape brand in the US.
“We’re still yet to hear any real details on how these are progressing, except the fact losses in the division are expected to rein in slightly.”
Imperial Brands will release interim results for the six months ended March 31 2022 in May.
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