Cigarette giant Imperial Brands (LON:IMB) said it was on course to hit annual targets as tobacco revenue wafted higher but volumes fell.
The company, formerly known as Imperial Tobacco, said first-quarter performance was in line with guidance and it was on track to meet its full-year outlook.
Group tobacco net revenue rose 16.6% to £1.6bn in the three months to December 31, helped by a strong performance in its US business ITG Brands.
However, total tobacco volume declined 3% and first quarter volume excluding acquired US brands declined 9.1%, with Iraq and Syria accounting for 4.4 percentage points of the fall.
Volumes took a further hit as Imperial deprioritised low-quality volume in certain markets.
It maintained good momentum behind growth brands, which gained 100 basis points (one percentage point) of market share, but it ceded some share in portfolio brands in line with strategy, resulting in overall group share falling 40 basis points.
The company, whose brands include Lambert & Butler and JPS in the UK and Gauloises and Davidoff overseas, said growth brands were outperforming with volumes up 7.3%.
ITG Brands contributed £226mln to net revenue, and growth markets' net revenue lifted 7.2% excluding Iraq and Syria.
E-cigarette business Fontem Ventures successfully gained traction with the Blu brand, strengthening its position in the US and establishing itself as the number two brand in the UK.
Imperial confirmed £55mln of cost savings in 2016 and said it was on track to increase its full-year dividend by at least 10%.
Chief executive Alison Cooper said: "We continued to make good progress against our strategic objectives in the first quarter and are well placed to meet full year expectations."