British American Tobacco PLC (LSE:BATS) said first-half revenue and profit are expected to be down by low-single-digit percentages due to economic pressures in the US and growing competition from "illicit vapour" products.
However, the cigarette maker insisted that it remains on track to hit its previous targets for this year, helped by market share gains in its tobacco business and a recovery from its vaping and other new categories.
In a half-year trading update, BAT said it expects an acceleration in performance in the second half of the year, driven by the phasing of launches of new categories and the benefits of US marketing action.
For the first half of the year, tobacco industry volume is down around 9% and is expected to be down around 3% for the full year, the FTSE 100 company said.
BAT's guidance for the full year remained for low single-figure organic constant currency revenue and adjusted operating profit growth, including around a 2% currency headwind to profits.
Chief executive Tadeu Marroco said: "As previously highlighted, we expect our performance to be second-half weighted, mainly driven by wholesaler inventory movements related to continued investment in our US commercial actions, as well as the phasing of new launches.
"Our guidance also reflects ongoing macro-economic pressures, particularly in the US market and continued lack of effective enforcement against the growing illicit vapour segment.
"As a result, we expect our H1 revenue and adjusted profit from operations to be down by low-single digits on an organic3, constant currency basis."
But he expressed confidence in the second half acceleration, saying the group is "sharpening our execution" and investing in ways to "sustainably strengthen our US business [and] accelerate innovation", with improvement in new category profitability for both the first half and full year.