Where next for Imperial Brands’ share price as US vaping crackdown hits revenues?
The tobacco company’s stock fell 10% after issuing a profit warning amid threats of a regulatory clampdown on vaping products in the US.
Imperial Brands’ share price fell more than 10% on Thursday after the company issued a profit warning amid threats of a regulatory crackdown on vaping products in the US.
The tobacco company said that ‘in light of challenging’ market conditions in the US, group revenues for the year are expected to grow at around 2% instead of the 4% it previously expected to achieve.
‘Whilst this is disappointing for the current year, we believe that next generation products provide a significant opportunity to deliver additive growth to complement our tobacco business,’ Imperial Brands said in a statement.
Vaping backlash bad news for 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 likely to see e-cigarette sales slump.
Earlier this month, the US Centers for Disease control and Prevention even went as far to tell the public to avoid using e-cigarettes altogether.
‘The US next generation products environment has deteriorated considerably over the last quarter with increased regulatory uncertainty,’ Imperial Brands said.
‘This has prompted a marked slowdown in the growth of the vapour category in recent weeks, with an increasing number of wholesalers and retailers not ordering or not allowing promotion of vaping products.’
Thinking about taking a position on tobacco stocks? Open an account with IG
Imperial Brands completes Auxly Cannabis deal
On Wednesday, Imperial Brands closed its C$123 million investment in Auxly Cannabis by way of a debenture, convertible into a 19.9% shareholding in the Canadian-based company.
‘We’re excited by the opportunities this partnership offers and look forward to working with Auxly to build its business and realize its significant future growth potential,’ Imperial Brands Corporate Development Director Conrad Tate said.
Imperial Brands is also in the process of divesting its premium cigar business, with the group on track to realise proceeds of up to £2 billion from its disposal programme before May 2020.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
Please see important Research Disclaimer.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.