UPDATE 1-Imperial Brands sees regulatory uncertainty to hit earnings

Tobacco group Imperial Brands on Wednesday forecast a 10% drop in its first-half profit and cautioned on full-year earnings because of a U.S. regulatory ban on some flavours of cartridge-based vapor devices and weaker consumer demand.

The warning comes on the heels of Stefan Bomhard's appointment as the chief executive officer of the FTSE 100-listed group. Growth of Imperial's "next generation" products has slowed and the vaping market in the United States has taken a turn for the worse after vaping-related deaths and the rising popularity of e-cigarettes among teens led to an intense regulatory crackdown.

"Regulatory uncertainty and adverse news flow continue to affect demand in the U.S. and Europe," Imperial Brands said. The maker of Winston cigarettes said the ban by the U.S. Food and Drug Administration (FDA), which comes into effect this week, has led to a write-down of flavored inventory and result in a 45 million pounds ($58.55 million) impact on its first-half adjusted operating profit.

The company also said it will undertake a cost-savings programme, which would have an impact of 40 million pounds on its full-year adjusted profit. Shares in the blue-chip company were expected to open 2%-5% lower as per premarket indicators.