Imperial Brands sees revenue lift from pandemic

Demand for cigarettes has picked up in the COVID-19 pandemic, helped by a rise in home working that has given smokers more opportunities to light up, Imperial Brands said on Thursday.

The maker of Gauloises and West cigarettes nudged up its full-year revenue forecast.

A spokesman for the British firm said consumers appeared to be spending more on tobacco as they saved money in other areas, such as travel and holidays, while working from home meant many of them were not restricted by when they could smoke.

Imperial said it expected full-year net revenue to be broadly flat, with a 1 per cent increase in its tobacco business offsetting a 30 per cent drop in its small “next generation products” business, which includes e-cigarettes.

The company said at its half-year results that it would reduce investment in next generation products, once considered the next frontier for the tobacco industry.

The revenue forecast is slightly above guidance provided at the half year and the first indication of performance under CEO Stefan Bomhard, who joined in July.

The company also noted shifts in demand between markets, with strength in key European countries and the United States, but weakness in traditional summer tourist destinations, as smokers stayed home.

Still, Imperial forecast earnings per share down around 6 per cent, due to increasing its provisions as a result of COVID-19 uncertainties and pandemic-related manufacturing costs.

Imperial will report full-year results on 17 November, when it will announce the date of a capital markets event in the first quarter of 2021.