In an annual meeting update, Imperial Brands (IMB) announced that first-half adjusted earnings would be down by around 10 per cent, due to inventory write-downs linked to a ban by US regulators on certain types of vaping pod flavours.
Pressure on this corner of the market started building in August 2019, when the Centers for Disease Control and Prevention (CDC) investigated a cluster of pulmonary illnesses associated with vaping or e-cigarette use. It eventually transpired that the CDC may have jumped the gun on the issue, but the bad news stories relating to e-cigarettes keep on coming, even though some public health authorities maintain that it provides an effective mechanism to wean smokers off traditional tobacco products.
Imperial admits that adverse newsflow continues to dampen demand in the US and Europe, so year-on-year net revenue from its new generation products will be “significantly lower”, with results subject to “increased provisions for slow-moving stock”. The update comes a couple of days after it was confirmed that former Inchcape (NCH) supremo Stefan Bomhard had been appointed chief executive as successor to Alison Cooper, who fell on her sword in the wake of September’s profit warning.
