Winston cigarette maker Imperial warns of costs from prolonged Iran war but keeps outlook steady
Imperial Brands Faces Challenges Amid Iran War and Market Shifts
Impact of the Iran War on Imperial Brands
May 12 (Reuters) - Imperial Brands said on Tuesday that the Iran war could increase costs and hurt consumer demand if it drags on, even as the British tobacco group had not seen any material impact to date which prompted it to reiterate its full-year outlook.
Global Supply Chain and Cost Pressures
The U.S.-Israeli war against Iran, now in its third month, has triggered an unprecedented crunch in supplies from the Middle East, raised energy and logistics costs for companies everywhere and prompted forecast cuts, project delays and cost-cutting drives as it weighs on sentiment.
Competitive Position and Market Share
Pricing Strategy and Market Share Risks
Imperial, which typically undercuts rivals such as British American Tobacco and Philip Morris on pricing, warned in April that it might lose market share in its five biggest markets - the United States, Germany, the UK, Spain, and Australia - as it focused on profitability over volumes.
Recent Market Share Performance
The Winston and Davidoff cigarette and blu vape maker on Tuesday reported losses of 16 basis points in market share in the first half across its core markets.
Strategic Initiatives and Financial Results
Expansion into Smoking Alternatives
Imperial Brands has been working to expand its smoking alternatives business under a five-year strategy set by CEO Lukas Paravicini's predecessor, which aims to build scale in next-generation products while maintaining traditional tobacco operations.
Financial Performance Overview
Profit and Sales Trends
Its adjusted operating profit of 1.64 billion pounds ($2.23 billion) rose a meagre 0.6% on a constant currency basis during the six months ended March, slightly missing market expectations of 1.66 billion pounds, as it grappled with persistent declines in cigarette sales and stiff competition for smoking alternatives.
Currency Exchange Rate
($1 = 0.7366 pounds)
Reporting and Editorial Credits
(Reporting by Yamini Kalia in Bengaluru; Editing by Rashmi Aich and Louise Heavens)
