Imperial Brands share price sinks on profit warning

Imperial Brands share price sinks on profit warning
Written by:
Tsveta van Son
26th September 2019
Updated: 11th March 2020

Imperial Brands’ (LON:IMB) has slumped in London this Thursday, as the company cautioned on earnings amid the ongoing crackdown on vaping in the US. The update comes as blue-chip publisher Pearson (LON:PSON) also warned on profits this morning, pointing to weaker-than-expected trading in its  US Higher Education Courseware business.

As of 10:04 BST, Imperial Brands’ share price had given up 10.14 percent to 1,853.60p, significantly underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.99 percent higher at 7,361.83 points. The group’s shares have given up more than 31 percent of their value over the past year, as compared with about a two-percent fall in the Footsie.

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Imperial Brands cautions on earnings

Imperial Brands announced in a statement this morning that in light of what the company referred to as a challenging market for new generation products in the US, along with changes to its results expectations in the Africa, Asia and Australasia (AAA) division, it now expects its net revenue for the year to September 30 to grow at around two percent. Earnings per share meanwhile are expected to be broadly flat at constant currencies.

The company explained that the “USA NGP environment has deteriorated considerably over the last quarter with increased regulatory uncertainty,” which had “prompted a marked slowdown in the growth of the vapour category in recent weeks”.

“Whilst this is disappointing for the current year, we believe that NGP provides a significant opportunity to deliver additive growth to complement our Tobacco business,” Imperial Brands commented in the statement.

Analysts on blue-chip tobacco group     

Barclays reaffirmed the blue-chip tobacco maker as an ‘outperform’ yesterday, without specifying a target on the Imperial Brands share price. According to MarketBeat, the FTSE 100 company currently has a consensus ‘hold’ rating and an average valuation of 2,829.58p.

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