Imperial Brands in talks on Palmer & Harvey rescue; sees FY in line

Cigarette firm Imperial Brands on Thursday confirmed it was in talks to help rescue UK tobacco supplier Palmer & Harvey as it said it expected to deliver strong growth in full year revenues and earnings at actual currency rates.

Privately-owned Palmer & Harvey has been looking for a cash injection since the summer. It supplies around 90,000 stores across the UK, with supermarket giant Tesco taking the bulk of its business.

P&H rival Booker is in takeover talks with Tesco, which could jeopardise its relationship. The Competition and Markets Authority is looking into whether the proposed merger would reduce choice for shoppers and small stores supplied by Booker.

In a trading statement ahead of full year results, Imperial said its constant currency performance was impacted by “significant” additional investments in the year.

“We are on track to meet earnings expectations for the full year at both constant currency and reported exchange rates. Our cash generation remains strong,” the company said in a trading statement.

“We continue to invest behind our strategy to drive sustainable growth in a particularly challenging industry environment. The impact of this investment on earnings is mitigated by our cost programmes, pension scheme restructuring and ongoing efficiencies.”