Smoking from home: Imperial Brands sees revenue lift from pandemic
By Martinne Geller
LONDON (Reuters) - The demand for cigarettes has increased in the COVID-19 pandemic, aided by an increase in home working, which has given smokers more opportunities to light up, Imperial Brands said Thursday.
The manufacturer of Gauloises and West cigarettes has raised its sales forecast for the full year.
A spokesman for the UK firm said consumers appeared to be spending more on tobacco as they saved money in other areas such as travel and vacation, while working from home meant many of them weren't limited to when to smoke .
The news came as Ladbrokes and bwin owner GVC Holdings increased their annual profit prospects, helped by a surge in online gaming. This is yet another sign that consumers are trying to escape the stress of the pandemic.
Imperial anticipated largely unchanged net sales for the full year. A 1% increase in the tobacco business offset a 30% decrease in the small business with next-generation products, which includes e-cigarettes.
The company announced in its half-year results that it would reduce investment in next-generation products, once considered the next frontier for the tobacco industry.
The sales forecast is slightly above the forecast for the half-year and is the first indication of the performance of CEO Stefan Bomhard, who joined in July.
It's also above analysts' estimates, according to Jefferies analysts. The consensus was for an overall decline of 1.6% and for tobacco 0.4%.
Imperial shares rose less than 1% in morning trading.
The company also noted shifts in demand between markets, with strengths in key European countries and the United States, but weaknesses in traditional summer travel destinations as smokers stayed at home.
Still, Imperial was forecasting earnings per share of around 6% as provisions were increased due to COVID-19 uncertainties and pandemic-related manufacturing costs.
"We would suggest this is positive pressure," Jefferies analysts said. "The focus will now shift to the next year and whether it can maintain this dynamic when the dynamic changes again after COVID (recession, travel opening)."
Imperial will announce full year results on November 17th, when the date of a capital markets event is announced in the first quarter of 2021.
(Reporting by Martinne Geller; Editing by Jason Neely and Mark Potter)
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