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Imperial Brands Says FY View Disappointing Due To Challenging US Vaping Market

UK-based tobacco giant Imperial Brands plc (IMB.L,IMBBF.PK,IMBBY.PK) Thursday said it now expects Group net revenue for the year to September 30 to grow at around 2%, with earnings per share expected to be broadly flat at constant currencies.

The company said the disappointing outlook reflects challenging Next Generation Products or NGP market in the USA and changes to the company's results expectations in the Africa, Asia and Australasia or AAA division.

According to the company, the slowdown in the US vapour category combined with increased competitor discounting has impacted overall Group revenues and profitability.

The company said it expects overall NGP business will grow net revenue by around 50% this year, albeit below expectations. In the United States, the environment has deteriorated considerably over the last quarter with increased regulatory uncertainty, including individual US state actions. The company reported 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.

In Europe and Japan, the company expects good year-on-year growth.

Tobacco business continues to perform well, delivering low single digit revenue growth and higher tobacco operating profit.

The company said it expects results will benefit from about 30 million pounds of other gains this year, compared with 80 million pounds last year.

Given the evolving environment, the company is also evaluating the effectiveness of NGP supply chain, which may result in contract termination costs that are not included in revised expectations.

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