BAT reported first-half profit slightly ahead of analysts’ estimates, though it stepped away from its ambition to break even in its so-called next-generation product business this year amid an unexpected slowdown in sales of heated tobacco devices in Japan. The company expects revenue from its cigarette alternatives to exceed 1 billion pounds (US$1.3 billion) this year. A month ago it expected revenue “substantially” above that level.

“The growth in Japan has definitely flattened and the heated-tobacco category needs reinvigorating,” BAT’s director of external affairs Jerry Abelman said by phone. “Breaking even isn’t the focus right now.”

Overall BAT reported adjusted operating profit of 4.82 billion pounds (US$6.4 billion) in the first half, beating analyst estimates of 4.79 billion pounds. The shares rose as much as 5.1%.

BAT’s profits will provide a rare bit of cheer for tobacco investors as doubts intensify over long-term prospects for the cigarette industry. The Japanese slowdown and the rapid growth of US e-cigarette startup Juul Labs Inc. has made BAT and its peers look increasingly vulnerable. The London-based tobacco company’s shares have fallen 18% this year.

In a bid to spur faster growth in Japan, BAT will release a smaller version of Glo in the second half. The company is also aiming to convert more smokers by offering heated-tobacco sticks with more nicotine.

Foreign-exchange movements reduced first-half profit by 8%, and the company expects a drag of 5% to 6% for the full year. BAT reiterated that it expects to deliver another “good year” of earnings growth.