AGM Statement

RNS Number : 0240C
Imperial Brands PLC
05 February 2020



5 February 2020


AGM Update


Imperial Brands PLC today issues the following AGM trading update:


Tobacco trading remains in line with expectations, with a weighting to the second half as previously guided. However, following the US FDA's ban on certain flavours of cartridge-based vapour devices and weaker than expected consumer demand for vapour, we now expect constant currency full year Group net revenue to be at a similar level to last year and adjusted earnings per share to be slightly lower than last year.


First half adjusted earnings per share is expected to be down c. 10% at constant currency, due to the phasing of inventory write-downs, primarily relating to the US flavour ban.


Next Generation Products (NGP)

Regulatory uncertainty and adverse news flow continues to affect demand in the US and Europe. We estimate this will result in significantly lower year-on-year NGP net revenue as well as increased provisions for slow-moving stock. We are implementing a further cost savings programme to mitigate some of these short-term headwinds, which will result in a full year net impact on adjusted operating profit of c. £40m.


In addition, the FDA ban, which comes into force tomorrow, has resulted in a write-down of our flavoured inventory with a first half adjusted operating profit impact of c. £45m; in line with our previous estimates.


We believe that NGP provides consumers with potentially less harmful alternatives to combustible tobacco and offers a significant growth opportunity over the medium term to complement our Tobacco business. We support regulation that enforces higher product and marketing standards, which are critical for creating a stable and orderly vapour market that we can invest behind.



Our Tobacco business has had a good start in the first three months of the year with market share trends across the majority of our priority markets. The Europe division has benefited from price/mix gains, which have largely offset weaker volume trends. Our US business remains strong, although financial delivery has been temporarily affected, as anticipated, by wholesaler destocking following the year end price increase. The Africa, Asia and Australasia division has delivered revenue growth reflecting a strong volume performance and the sell-through of the Australian duty paid inventory.


Financial guidance

Our effective adjusted tax rate for the year is expected to be around 21% (2019: 19.1%).


At current exchange rates, we expect a currency translation headwind on net revenue and adjusted earnings per share of c. 1% at the half year and c. 3% at the full year.


As previously guided, free cash-flow in FY20 will be affected by some one-off cash outflows in relation to Russian excise tax liabilities (c. £100m) and the final deferred consideration for the Von Erl acquisition (c. £120m).


Potential divestments

Negotiations on the potential divestment of our Premium Cigar Division remain ongoing. We continue to consider the potential divestment of other non-core operations.






Investor Contacts

Media Contacts

Peter Durman

+44 (0)7970 328 903

Alex Parsons

+44 (0)7967 467 241

Matt Sharff

+44 (0)7964 110 921

Simon Evans

+44 (0)7967 467 684

James King

+44 (0)7581 052 880




Cautionary Statement

Certain statements in this announcement constitute or may constitute forward-looking statements. Any statement in this announcement that is not a statement of historical fact including, without limitation, those regarding the Company's future expectations, operations, financial performance, financial condition and business is or may be a forward-looking statement. Such forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected or implied in any forward-looking statement. These risks and uncertainties include, among other factors, changing economic, financial, business or other market conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described in this announcement. As a result, you are cautioned not to place any reliance on such forward-looking statements. The forward-looking statements reflect knowledge and information available at the date of this announcement and the Company undertakes no obligation to update its view of such risks and uncertainties or to update the forward-looking statements contained herein. Nothing in this announcement should be construed as a profit forecast or profit estimate and no statement in this announcement should be interpreted to mean that the future earnings per share of the Company for current or future financial years will necessarily match or exceed the historical or published earnings per share of the Company. This announcement has been prepared for, and only for the members of the Company, as a body, and no other persons. The Company, its Directors, employees, agents or advisers do not accept or assume responsibility to any other person to whom this announcement is shown or into whose hands it may come and any such responsibility or liability is expressly disclaimed.

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