Imperial vaping products blow cold

A September profit warning from the group was followed by the announcement that Imperial’s chief executive officer, Alison Cooper, would be stepping down – it announced the imminent departure of chair Mark Williamson in February. Along with its results, Imperial announced senior independent director Thérèse Esperdy as Mr Williamson’s successor from the start of next year. The search for Ms Cooper’s replacement continues as the company struggles to mitigate the twin threats of volatile global tobacco demand and a troubling environment for its NGPs.

NGP net revenues did increase by half, “but that was way below what we would have hoped for”, admitted chief financial officer Oliver Tant. The environment has been impacted by stiffer competition and “an inability to differentiate products”, he said, adding: “I think regulators probably have a little to answer for... the new entrants into the category have created to some degree a regulatory nightmare around youth access prevention, which has impacted the category as a whole.” President Trump has raised fears and touted bans on flavoured vaping products in the US. Imperial will nevertheless forge ahead with a renewed focus on NGP markets with higher profits and more sustainable growth – it views its blu brand and vapours favourably.

Imperial has become more dependent on NGPs, deriving 70 per cent of its sales growth over its financial year from these products. It looks set to dispose of its cigar business, meanwhile, having recognised the division as an asset held for sale with net assets of £1.1bn – “on completion of the divestment, cumulative foreign exchange gains of approximately £300m to £400m that have been recognised in reserves will be recycled to the income statement”, the company said. Tobacco volumes fell 4.4 per cent with noted challenges in Africa, Asia and Australasia, although Imperial said that good tobacco growth in the Americas and Europe had offset these challenges. 

House broker Jefferies forecasts full-year 2020 pre-tax profits of £3.5bn and earnings per share of 2.9p, rising to £3.7bn and 3.1p in 2021.