Tobacco group Imperial Brands has said that it is on track to meet its full-year operating profit forecast, helped by higher cigarette prices and lower losses in its next-generation products business.
Overall tobacco volumes were in line with its estimates in the year ended September 30, the company said, although it expects adjusted operating profit at its tobacco business to be 'slightly' slower than last year.
Profitability is being held back by factors including higher investments in its top five cigarette markets and higher excise costs in Australia.
After years of sluggish sales and missteps related to its e-cigarettes business, chief executive Stefan Bomhard laid out a five-year turnaround plan in January that included focusing investments on its most profitable, top five cigarette markets and expanding sales of tobacco-heating products in Europe and e-cigarettes in the United States.
'Making Good Progress'
On Wednesday, he said the company had made good progress in implementing the strategy, even though it was seeing some of its long-term market share growth rates in the five markets "beginning to stabilise".
"We are building a high-performance culture with the introduction of new more consumer-focused ways of working, and have made a significant number of new hires to enhance our capabilities in key areas," Bomhard said. "I am pleased to report the business continues to perform well and we remain on track to deliver our full-year results in line with expectations.”
Group organic net revenue is expected to grow by around 1% at constant currencies.
On Course To Meet Forecasts
Still, the company is on course to meet its forecast for low- to mid-single digit adjusted organic operating profit growth. That is due in part to "significantly" lower losses in its next generation products business, which is benefitting from pulling out of unprofitable markets and a sharper focus on high growth categories.
Announcing its first-half sales in May, the group said that it fell short of profit and sales estimates. The company will report its final annual results on 16 November.