Imperial Tobacco chief warns over ‘tough year’

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.”