Lambert & Butler owner assures on full-year results despite Palmer & Harvey hit
Imperial Brands said first-half reported earnings will be knocked by a previously announced write-off after Palmer & Harvey went bust.
Tobacco giant Imperial Brands has said annual earnings remain on track despite a first half hit from the collapse of UK wholesale Palmer & Harvey, the rising pound and tighter regulation.
The group – which makes Davidoff and Lambert & Butler – said first-half reported earnings will be knocked by a previously announced write-off of up to £160 million suffered after Palmer & Harvey (P&H) went bust last November.
Around 2,500 staff lost their jobs at P&H – the UK’s biggest supplier of cigarettes – after it collapsed into administration despite attempts to secure a lifeline for the troubled wholesaler.
It also provided alcohol, groceries and frozen food to some 90,000 retail accounts, including Tesco.
The recent strengthening of the pound will also impact on underlying earnings by around 3.5% at the half-year and 2.5% to 3% at the full year, as it will lower income from overseas when translated into sterling.
This will be compounded by first-half revenue woes after new rules imposed by the European Union, which meant that tobacco manufacturers can only produce cigarettes in standardised packaging and must contain less than 20 sticks per pack.
But Imperial stuck by forecasts for annual sales and earnings as it said its push into vaping would help deliver a better performance in the second half.
Imperial owns the blu e-cigarette brand and said it was “prioritising” the vapour growth, extending into new markets and launching a new one-click liquid pod system, called myblu.
It said myblu received a good customer response in the US, where it was recently launched.
Launches are also being planned for France, the UK, Russia and Italy, with aims to have myblu in at least 10 markets by the end of the financial year.
Imperial said late last year it was “stepping up” its expansion into the vaping market as the tobacco industry comes under pressure from falling cigarette sales.
As well as pressing ahead with new e-vapour launches in new and existing markets, it is also conducting consumer trials of “heated tobacco products”.
Imperial is the latest in a long line of tobacco firms searching for additional revenue streams as traditional cigarette consumption continues to fall.
The company sold 265.2 billion cigarettes last year, a decline of 4.1%.