British tobacco company chief to leave in wake of vaping slowdown

London

IMPERIAL Brands Plc said chief executive officer Alison Cooper is stepping down from the UK tobacco company, a week after it warned that sales of cigarette alternatives are falling short of expectations.

The maker of Blu vaping devices said Ms Cooper, who has been in the top job for nine years, will leave once a successor is found. She is the second CEO to announce a departure from a blue-chip British company in two days, after Tesco Plc's Dave Lewis on Wednesday.

Imperial shares rose as much as 2.4 per cent early Thursday in London.

The company said last week that earnings growth ground to a halt in the latest 12 months after a drastic slowdown in revenue from smoking alternatives and weak cigarette sales. That came after the outbreak of a mystery illness linked to vaping led to a US crackdown on the practice.

Under Ms Cooper, 53, Imperial has struggled to keep up with bigger rivals like British American Tobacco Plc in the world of e-cigarettes and devices that heat tobacco rather than burning it. Upstart Juul Labs Inc, at the centre of the storm over vaping in the US, also stole a march on the established players.

Imperial, the smallest of the major international tobacco companies, has yet to find a buyer for its premium cigar business, after it announced plans for a sale earlier this year.

The company's shares have fallen more than 20 per cent this year. After a run-up that ended in 2016, they are roughly back to the level when Ms Cooper took over in 2010. Her departure continues a leadership overhaul that began earlier this year when Imperial said it was seeking a successor to chairman Mark Williamson.

Ms Cooper's move follows Bloomberg's story on a confidential report by financial communications adviser Tulchan, arguing for more financial transparency at the company, after investors and analysts voiced concerns over its accounting.

In June, Liberum analyst Nico von Stackelberg slammed Imperial's earnings calculations, saying the company includes non-operational factors such as gains from asset sales and uses that definition of profit as a factor in setting executive bonuses.

"It's time for a clean sheet and a new management team," said Freddie Lait, chief investment officer of Latitude Investment Management.

Investors have also expressed concern with Imperial's commitment to smaller, local brands at a time when smoking is in decline. While Ms Cooper has streamlined the portfolio in some areas, the company four years ago expanded its US operations with the acquisition of Winston, Kool, Salem and Maverick cigarettes.

"Alison has driven a sharper focus on Imperial's strongest brands and markets, halving the number of cigarette brands to ensure a higher quality of growth," Mr Williamson said in a statement. BLOOMBERG