Adds detail, shares, CEO and analyst comment, paragraphs 3-5, 7 and 10

By Yamini Kalia and Emma Rumney

May 12 (Reuters) - Imperial Brands IMB.L warned on Tuesday that the Iran war could increase costs and hurt consumer demand if it drags on, even as the British tobacco group said it had yet to feel any material impact and reiterated its full-year guidance.

The U.S.-Israeli war against Iran, now in its third month, has resulted in an unprecedented crunch in supplies from the Middle East, raising energy and logistics costs while triggering reduced earnings forecasts, project delays and cost-cutting.

Any impact from the Middle East conflict, if it continues, is likely to be felt in the company's 2027 financial year, CEO Lukas Paravicini told reporters, citing potential input costs ranging from filters and plastics as well as consumer behaviour.

"We will always monitor the situation and implement mitigating actions," he said, declining to discuss specific contingency plans but pointing to the company's tactics during previous crises, including the Red Sea crisis and war in Ukraine.

Shares in the Bristol-based company were up 1.2% at 27.61 pounds by 0747 GMT.

DECLINE IN MARKET SHARE

Imperial, which typically undercuts rivals such as British American Tobacco BATS.L and Philip Morris PM.N on pricing, said its market share in core markets of the United States, Germany, the UK, Spain and Australia dropped by 16 basis points in the first half as it focused on profitability over volumes.

RBC analysts said the decline was a concern, having previously viewed Imperial's gain of 48 basis points from 2020 to 2025 as central to its turnaround.

Imperial Brands has been working to expand its smoking alternatives business under a five-year strategy set by Paravicini's predecessor. It aims to build scale in next-generation products while maintaining traditional tobacco operations.

Adjusted operating profit of 1.64 billion pounds ($2.23 billion) rose by 0.6% on a constant currency basis in the six months to March 31, slightly missing market expectations of 1.66 billion pounds, as the company contended with falling cigarette sales and stiff competition in smoking alternatives.

Rival BAT in February signalled possible job cuts from a new AI-driven productivity plan and reported higher annual profit as its Velo nicotine pouch gained U.S. market share from Philip Morris's Zyn and Altria's MO.N On!

($1 = 0.7366 pounds)