British tobacco company Imperial Brands reported weaker-than-expected sales of its e-cigarettes on Wednesday, citing a temporary slowdown in the United States, helping to send its shares to their lowest level this year.
The maker of Gauloises cigarettes and Blu e-cigarettes reported higher half-year revenue in line with analysts' estimates and earnings per share that were above forecasts. It also stood by its full-year revenue and earnings targets.
But its shares fell 4% in morning trade after it reported revenue of only £148 million from "next-generation products", well short of the £176 million analysts had expected, according to a company-supplied consensus.
US Slowdown
Chief Executive Alison Cooper told Reuters a slowdown in the United States was to blame, with sales there hurt by a regulatory backlash against youth vaping.
"You've seen the category itself did slow in our first half, particularly in the first quarter, in the U.S. But I think that's a temporary thing. We're seeing it growing again currently," Cooper said.
"When you're developing something new there's always going to be the odd bump in the road, but the actual prospects are very positive indeed," she said.
Jefferies analysts estimated that the United States is expected to deliver around 60% of the total growth in next-generation products this year.
"If it doesn't pick up, it could weigh," they said in a note.
Imperial shares were down 4.2% at 2,229.5 pence by 0833 GMT.
Meeting Expectations
The company reported adjusted half-year net revenue of £3.66 billion, bang in line with analysts' expectations, and earnings per share of 115.6 pence.
Analysts on average were expecting adjusted earnings per share of 112.9 pence, according to a company-supplied consensus.
Excluding the impact of foreign exchange fluctuations, revenue rose 2.5%, which Jefferies said was below analysts' expectations of 3.2%.
The company stood by its full-year targets, calling for revenue growth at or above the upper end of a 1 to 4% range and earnings per share growth toward the lower end of its medium-term range of 4 to 8%.
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