Rizla owner Imperial Brands on track despite weak European tobacco sales

The company said gains in the UK, US and Australia helped to offset the impact of declining sales in Germany and Spain in recent months.

Tobacco giant Imperial Brands has said it is on track despite weak sales in continental Europe (Ally Carmichael/Imperial Tobacco/PA) (PA Media)

Tobacco giant Imperial Brands has said it is on track despite weak sales in continental Europe.

The Gauloises and Rizla owner said gains in the UK, US and Australia have helped to offset the impact of declining sales in Germany and Spain in recent months.

It comes three weeks after the company said it was in talks to offload its Russian operations, which employ around 1,000 people, to an unnamed local party.

Imperial said its tobacco sales volumes have been in line with expectations as it continued to grow its vaping and heated tobacco business, titled Next Generation Products (NGP).

The group said customers have “responded positively” to trials of its Pulze heated tobacco system in Greece and the Czech Republic, and improvement of its Blu vaping product in the US.

It added that NGP revenues for the first half of the year are set to be “slightly ahead” of the same period last year after growth in Europe.

However, total revenues for the first half are due to be roughly flat due to a “weaker tobacco performance in Europe”.

Imperial said: “Europe’s performance has been driven by the return to pre-Covid purchasing patterns as northern Europeans resume international travel, as well as price phasing in some markets.

“However, price increases during the latter part of the first half will support a stronger revenue performance in the second half.”

Matt Britzman, equity analyst at Hargreaves Lansdown, said: “Key for any tobacco company in today’s world is how they’re going to transition away from the increasingly unpopular classic tobacco products and build out an offering of next-generation products.

“Imperial Brands pretty much scrapped their plans and started from scratch a year or so ago when the new strategy was announced, focusing now on heated tobacco products in Europe and its Blu vape brand in the US.

“We’re still yet to hear any real details on how these are progressing, except the fact losses in the division are expected to rein in slightly.”