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Imperial Brands share price: where next after CEO Alison Cooper set to exit

The British tobacco company halved its growth forecasts last week after warning that backlash from US regulators against vaping could dent revenues, prompting a hunt for a new CEO by disgruntled shareholders.

Imperial Brands Source: Bloomberg

Imperial Brands share price has fallen more than 23% since January, with the company struggling to deal with challenging market conditions that have forced its to downgrade its full-year guidance.

In response, shareholders eager for strategic change to rectify the situation have called for new management, with Imperial Brands’ CEO Alison Cooper set to step down once a replacement is found.

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Challenging times ahead for Imperial Brands

Imperial Brands downgraded its full-year revenue growth from 4% to 2%, with earnings per share flat year-on-year.

The company’s decision to revise its previous guidance reflects the challenges its next generation products (NGP) are facing in the US market, as well as its weaker performance more generally in Africa, Asia and Australasia.

Over the last quarter, Imperial Brands admitted that NGP sales have ‘deteriorated’ due to increased regulation from US regulators, with Massachusetts opting to temporarily ban the sale of e-cigarettes.

To offset weaker growth, the company is prioritising cost cutting measures, with it looking to raise £2 billion from its asset divestment programme by May 2020.

‘But reducing costs can't prop up profits forever,’ Nicholas Hyett, equity analyst at Hargreaves Lansdown, said. ‘Scale is the key to success in the tobacco industry, and as the smallest of the big-four tobacco giants, Imperial can ill-afford to lose ground.’

US vaping backlash will hurt big tobacco

The tobacco industry has invested heavily in next generation products (NGP) like e-cigarettes as a method of offsetting declining demand for traditional tobacco products.

But with the recent consumer and regulatory backlash brought about by a series of vaping-related illnesses that have claimed the lives of 11 people in the US, the industry is expected to see sales slump.

Last month, the US Centers for Disease control and Prevention even went as far to tell the public to avoid using e-cigarettes altogether.

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