Imperial Brands predicted a rise in revenue and profit for the upcoming year, yet announced on Tuesday that the growth in the first half would be slower due to this year’s price increases and investments in alternatives to tobacco.
Imperial Brands shares are down 0.96% at the time of writing.
Imperial’s Finance Chief Lukas Paravicini explained to journalists that slower growth in the first half of a year was predicted due to the tough comparison with a robust previous year, during which Imperial implemented substantial price hikes.
The company posted a 3.9% increase in adjusted operating profit for the 12 months ending 30th September, excluding the effects of foreign exchange and Imperial’s withdrawal from Russia. This surpassed the average analyst estimates of 3.5%.
CEO Stefan Bomhard stated that Imperial’s strategy, focused on reclaiming market share in five crucial tobacco markets, is yielding positive outcomes.
Imperial Brands forecasts low single-digit revenue growth in 2024, with adjusted operating profit expected to fall within the middle of its mid-single-digit range.
According to investment director at AJ Bell, Russ Mould, “Parts of the market remain doubtful nonetheless. When you have headlines about governments in different countries clamping down on smoking and trying to stop young people from vaping, it’s no wonder that sentiment remains poor towards shares in the sector.”
He added, however, that “consumers are increasingly paying more attention to health and wellness, and owning shares in this sector may not sit well with their moral conscience. But there will be others who see the opportunity to buy growing companies at cheap valuations. At the moment, the balance seems to be in favour of the former.”