IMPERIAL Tobacco chief executive Alison Cooper yesterday warned her company was in the midst of the “toughest year she can remember” as the FTSE 100 group pinned its long-term hopes on the introduction of an electronic cigarette.
The firm said it will launch an “e-vapour product” next year, following arch rival British American Tobacco’s (BAT’s) launch of a similar device last month.
Cooper surprised the market by not issuing a profit warning, but instead stuck by her previous earnings guidance. In April, Imperial said that its earnings per share would be towards the lower end of its 4-8 per cent target range.
Her comments came as Imperial – which owns brands including John Player Special, Lambert & Butler and Regal – delivered its third-quarter trading update, which showed that a drop in sales volumes had accelerated to 7 per cent from 5.9 per cent in the first half of its financial year. Revenues dipped by 3 per cent.
Analysts at investment manager Brewin Dolphin said: “The chief executive said this is the toughest year she can remember. In an attempt to catch up with BAT, Imperial announced its alternative tobacco subsidiary, Fontem, will launch an e-cigarette next year.
“BAT launched its e-cigarette ‘Vype’ in the UK last month and you can now buy the product on-line. BAT’s chief executive believes that alternative products could account for as much as 40 per cent of tobacco company’s revenues in 20 years time.
“Imperial shares are benefitting from a relief rally as management avoided the feared profit warning.”