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Imperial cuts annual profit forecast on U.S. vaping backlash

Imperial cuts annual profit forecast on U.S. vaping backlash
FILE PHOTO: A man uses a vape device in this illustration picture, September 19, 2019. REUTERS/Adnan Abisi/Illustration/File Photo -
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Adnan Abidi(Reuters)
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(Reuters) – British tobacco company Imperial Brands Plc <IMB.L> on Thursday cut its revenue and profit outlook for the full year in the face of a regulatory backlash against vaping in the United States that could reshape the industry.

The company now expects annual revenue to grow around 2% and earnings per share to be flat compared to previous year at constant currency rates. Its “next generation products” (NGP) unit that focuses on e-cigarettes and vapour-based products, is also seen growing below its expectations.

Vaping devices, which vaporize liquid containing nicotine, have borne the brunt of regulatory crackdowns globally. The Donald Trump administration in the United States has announced plans to remove all flavoured e-cigarettes from store shelves due to their rising popularity among teenagers.

“(Regulatory uncertainty in the U.S.) 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,” the company said.

Imperial had earlier expected revenue to grow at or above the upper end of its forecast range of 1% to 4%, with profit rising between 4% and 8% in the medium term. It reported revenue of 30.52 billion pounds and profit of 272.2 pence per share in 2018.

Its NGP business is now expected to grow by around 50%, and Imperial said it could also end some contracts in its supply chain for these newer products as it evaluates the path ahead.

The possible contract cuts are not included in its latest outlook, it said.

(Graphic – Tobacco stocks hit by e-cigarette crackdown, https://fingfx.thomsonreuters.com/gfx/mkt/12/6595/6526/e-cig.jpg)

(Reporting by Pushkala Aripaka and additional reporting by Indranil Sarkar in Bengaluru; Editing by Bernard Orr and Rashmi Aich)

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