US vaping deaths hit growth at Imperial Brands
Imperial Brands warned this morning that it will fall short of expected growth in its vaping business after several deaths in the US were linked to e-cigarettes.
The company said that events in recent weeks has caused a “marked slowdown” in growth of its vaping sector. There is no suggestion Imperial’s products caused the deaths.
Imperial said that it would grow revenues from its next-generation products business, which includes e-cigarettes, by around 50 per cent this year. That, the company admitted, was “below our expectations”.
It said that more wholesalers are now refusing to order vapes or allow them to be promoted.
Shares dropped as much as 8.4 per cent to 1,892.5p this morning. British American Tobacco was also dragged down by 4.5 per cent to 2,793.5p per share.
The news has hit Imperial’s flagship e-cigarette Blu, which was done better with customers after a big consumer promotion push. However US environment has “deteriorated considerably”, hitting Blu. It has also been challenged by competitors discounting their products.
“We continue to focus on managing the operational and regulatory challenges associated with a rapidly evolving category with a particular focus on recent USA developments and their potential impact on other next generation products markets,” the company said in a statement.
In traditional cigarettes the company is still showing low single-digit revenue growth and higher operating profit.
Overall, the company said that net revenue will increase around two per cent in the year, a step down from the upper end of a one to four per cent range.
Liberum analysts Nico von Stackelberg and Robert Waldschmidt said the update from Imperial was “disappointing”. They added that a push for gains in Australia had impacted on the firm’s finances.
“Australia appeared to be a key driver of this profit warning. The company notes it is a highly competitive environment,” the analysts said.
It comes as vaping giant Juul’s chief executive yesterday stepped down and a potential merger between Juul owner Altria and Philip Morris International was called off.
Around 450 cases of vaping-linked lung diseases have been discovered in the US, with several deaths. President Donald Trump has called vaping a “problem” and signalled tough new laws.
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