Imperial Brands (IMB.L) reaffirmed its fiscal 2026 guidance but warned that the uncertainty caused by the ongoing conflict in the Middle East could have an impact on its business in the second half, sending its shares down 7% in Tuesday midday trade.
In a same-day trading update, the UK-based tobacco group said it still expects to deliver low-single-digit net revenue growth in tobacco and double-digit growth in next generation products, or NGP, for the full fiscal year. Also reaffirmed were the group adjusted operating profit growth forecast of between 3% and 5% and the projected EPS growth of at least a high-single-digit percentage, all on a constant currency basis.
"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," the company said. "We continue to monitor the situation and will give a further update with our H1 results announcement on 12 May."
For the six months ended March 31, Imperial Brands anticipates low-single-digit growth in tobacco and NGP net revenue, supported by robust tobacco pricing and continued momentum in heated tobacco, vape and modern oral products.
Group adjusted operating profit for the fiscal first half is projected to come in "slightly" higher year over year, at constant currency, with growth anticipated to accelerate in the latter half, in line with previous guidance.
Meanwhile, headwinds related to foreign exchange translation is currently forecast to be between 2% and 2.5% on EPS for the fiscal first half and 0.1% on full-year EPS.
Analysts at RBC Capital Markets adopted a negative sentiment on Imperial Brands, noting that the company expects a "modest" decline in market share across its five priority markets during the fiscal first half.
"This contrasts with flat market share in FY2025 and +48bps over the last five years. We regard this latter point as having been fundamental to Imperial's rehabilitation, and therefore are [nervous] about the loss of share in the latest six months. The statement gives no indication of the likely market share trend in 2H," the research firm said.