LONDON (ShareCast) - (Sharecast News) - Imperial Brands shares tumbled on Thursday as the tobacco giant cut its annual revenue guidance amid challenges in the US vaping market and weakness in Africa, Asia and Australasia.
The company slashed revenue growth expectations for the year ended 30 September to 2%, having previously forecast an increase of as much as 4%. Earnings per share were now expected to remain flat at constant currencies.

Imperial said its next generation products business would fall short of expectations and deliver 50% revenue growth as the US market "deteriorated considerably" over the last quarter amid the increased risk of a regulatory crackdown in the US after a string of deaths linked to vaping.

The uncertainty came to a head earlier this month as US President Donald Trump said flavoured vaping products should be banned.

Imperial said its tobacco business would deliver low single-digit revenue growth and higher tobacco operating profit following good performances in Europe and the Americas, which were likely to offset tougher trading conditions in the Africa, Asia and Australasia (AAA) division.

A stronger AAA divisional performance was expected in 2020, after Imperial Brands increased investment behind its share in the Australian market due to a highly competitive environment.

The company said it remained on track to realise proceeds of up to £2bn from its disposal programme before May 2020, as the divestment of its premium cigar business continues to progress well and had attracted several potential buyers.

At 0925 BST, the shares were down 10% at 1,850p.

Hargreaves Lansdown analyst Nicholas Hyett said the US deaths had hit demand for Imperial's myblu product.

"Vaping's only a small contributor to revenues and profits at the moment, which is why full year earnings per share look set to come in flat year-on-year, but hopes had been high that the vaping segment would drive growth as traditional tobacco declines," he said.

"Increased regulatory scrutiny and retailers reluctant to stock vaping products is seriously undermining that hope. For now sales in Europe and Japan seem to have escaped too much of a knock-on effect, with regulators in the UK looking to reassure vapers about the health benefits of switching from traditional tobacco to e-cigarettes."

"However, having only recently increased investment behind its US vaping proposition this is less than ideal for Imperial."

(Writing by Michele Maatouk; Editing by Frank Prenesti)

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