Imperial Brands PLC (LSE:IMB) shares fell 5.4% to 2,915p after the cigarette maker kept its full-year guidance unchanged as pricing in its tobacco business offset continued volume declines, while investment in next-generation products (NGPs) weighs on profits.
The FTSE 100 group said it expects low-single-digit growth in tobacco and NGP net revenue in the first half, with adjusted operating profit slightly higher year on year.
Growth is expected to accelerate in the second half, in line with previous guidance, as earlier price increases feed through and investment phasing supports performance.
Full-year guidance remained for at least high-single-digit growth in earnings per share and free cash flow of at least £2.2 billion.
Tobacco pricing remains a key driver, offsetting volume declines that were in the low single digits, while NGP growth is being supported by products such as Pulze heated tobacco and blu vaping devices.
However, the company expects losses from NGPs to increase slightly as it continues to invest in building scale and market share.
On the current geopolitical situation, the group said: "The conflict in the Middle East has resulted in a more uncertain geopolitical and macro environment. Whilst there has been no material business impact to date, the potential future impact during the second half remains uncertain."
Imperial also highlighted progress on its transformation plan, stating it had made “a good start" to its 2030 strategy as it focuses on becoming more data-led and efficient.
Broker Panmure Liberum said there was no change to the company’s full-year earnings growth expectations, driven by modest revenue growth, operating leverage and the ongoing share buyback programme.
"There is plenty of detailed guidance for the half-year outcome too, which completely derisks the results when announced on 12 May.
"Sterling strength is the only obvious niggle anywhere in the statement, the FY/26E translation impact on EPS now estimated at a 0-1% headwind rather than the 2-2.5% tailwind when the company reported FY/25 results last year, but that is (a) nothing to do with the company and (b) well known."
** UPDATE: Adds share price and broker comment **