Imperial Brands, the maker of Winston, Kool and Gauloises cigarettes, is expected to post a rise in full-year profit as it gears up to launch new next generation products, potentially including heat-not-burn products, next year.
Imperial initially resisted the move into heated tobacco products, but in its half-year results, it was forced to assure analysts it would not fall behind rivals in developing one.
Next generation products, which also include vaping devices, are an increasingly important area for cigarette makers to develop as tobacco sales decline.
Alicia Forry, an analyst at Investec, said: "Given continued market scepticism around Imperial's trading performance and relative lack of presence in some next generation product (NGP) segments, the FY17 update should reassure."
Investec expects Imperial to report full-year profit growth of seven per cent when it posts its earnings on 7 November. Revenue is forecast to hit £8.6bn, up from around £8bn the previous year as the company begins to rebound from several weaker-than-usual years.
Forry added that the new NGP launches were expected to be focused in the electronic vapour and Blu e-cigarette brand "but the company could yet surprise with launches in other areas".
"We think Imperial, if it so wished, could launch a heat-not-burn product within one year and at an easily manageable cost," Forry said.
S&P Global analyst Jia Man Neoh added that the launch of NGPs "indicate a potential shift in strategy towards adopting heat-not-burn products, and we take this positively".