ZCZC
BCN-16
BRITAIN-US-TOBACCO-EARNINGS-BUSINESS
US vaping backlash sparks profit warning at Imperial
LONDON, Sept 27, 2019 (BSS/AFP) – Shares in British tobacco giant Imperial
Brands slumped Thursday after it issued a profit-warning linked to a backlash
against vaping in the United States.
Imperial, whose e-cigarette brand is blu and traditional tobacco brands
include Davidoff and Gauloises, expects annual revenue to grow 2.0 percent,
down from guidance of as much as 4.0 percent, it said in a statement.
The group blamed the downgrade on “a challenging NGP (next generation
products) market in the USA”, as well as a weaker performance from its
Africa, Asia and Australasia division.
In reaction, the share price of Imperial Brands tumbled 10.4 percent to
o18.50 on London’s benchmark FTSE 100 index, which was up 1.0 percent nearing
midday.
Rival British American Tobacco, which this month axed 2,300 jobs as part
of a drive towards controversial e-cigarettes, saw its stock slide 0.9
percent to o28.97.
“Imperial Brands lowered its full-year outlook as there has been a
backlash against vaping in the US,” noted David Madden, analyst at CMC
Markets UK.
“In some countries, cigarette sales have been in decline, so major tobacco
firms has been ramping up their investments in alternative products like
vaping, but given the recent adverse reaction to vaping, traders are fearful
the sector will be squeezed.”
US President Donald Trump’s administration is considering an outright ban
on flavoured e-cigarette products, which authorities say target teen users,
following a spate of vaping-linked deaths.
Imperial meanwhile was not the London stock market’s biggest faller
Thursday.
Instead shares in publisher Pearson nosedived 17.8 percent to 708 pence
after the company warned it would take a hit from weaker-than-expected trade
at its US higher educational courseware business.
BSS/AFP/HR/1030