Home Money MARKET REPORT: Tobacco shares burnt by vaping tax Budget blow

MARKET REPORT: Tobacco shares burnt by vaping tax Budget blow

by Elijah
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Budget hit: Manufacturers and importers will pay a new tax, designed to stop vaping among minors

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Tobacco stocks fell into the red amid reports that a vape tax could be introduced in the Budget next week.

The tax, designed to curb underage vaping, will be paid by manufacturers and importers.

Products made with large amounts of nicotine face higher taxes. This measure and a one-off increase in tobacco taxes are expected to generate more than £500 million each year by 2028-29.

Shares in Imperial Brands fell 4.8 per cent, or 88 pence, to 1,730.5 pence, British American Tobacco lost 0.3 per cent, or 7.5 pence, to 2,364 pence and Supreme fell 3.8 per cent, or 5p, to 127p.

However, Susannah Streeter, head of money and markets at investment platform Hargreaves Lansdown, downplayed the impact of a potential tax.

Budget hit: Manufacturers and importers will pay a new tax, designed to stop vaping among minors

Budget hit: Manufacturers and importers will pay a new tax, designed to stop vaping among minors

She said: ‘Although the industry is fighting for a position in the vaping market, given the decline in tobacco volumes, these products are still a relatively small part of the picture.

“Investors were also expecting greater regulation in the sector, so a potential tax increase is not a big surprise and, given they are global companies, a change in UK tax policy won’t change the dial too much.”

The FTSE 100 fell 0.02 per cent, or 1.28 points, to 7,683.02 and the FTSE 250 added 0.19 per cent, or 36.74 points, to 19,163.66.

Across the Atlantic, Zoom shares were in the spotlight after the tech giant on Monday night reported strong fourth-quarter revenue and announced plans for a £1.2bn share buyback. The stock rose more than 6 percent.

Back in London, Vodafone shares rose amid reports that it is in talks with a major Swiss company about merging its Italian businesses.

The FTSE 100 telecoms giant is said to be in talks to take a minority stake in a potential partnership with Swisscom’s Italian arm Fastweb.

Swisscom, which employs almost 20,000 people, is a mobile phone, television and broadband provider. This would create Italy’s second largest fixed-line broadband operator.

Stock Monitoring: Brick Capacity

Building materials company Brickability saw its shares fall after warning that profits will be at the lower end of forecasts as sales continue to fall amid problems in the property market.

Brick volume sales have been “significantly” lower over the past year across the market.

Demand for bricks and construction materials is expected to remain low until the end of its financial year in March.

The shares fell 12.3 per cent, or 9.4 pence, to 67 pence.

The new company would remove its debt from Vodafone’s books, Reuters reported.

A Vodafone spokesman declined to comment. The shares rose 3.5 per cent, or 2.32 pence, to 68.4 pence.

Less than a month ago, Vodafone rejected an offer from French telecommunications group Iliad to combine its Italian businesses.

Medical device group Smith & Nephew reported strong growth led by its sports medicine and ear, nose and throat division, which specializes in manufacturing products that help repair soft tissue injuries.

That helped the group’s revenue rise 6.8 per cent to £1.2 billion in the final three months of 2023 and 6.4 per cent to £4.3 billion during the financial year.

The shares, however, lost 1 per cent, or 11.5 pence, to 1,114 pence. Chemicals group Croda headed in the same direction after posting a 70 per cent drop in profits to £236.3 million by 2023.

That was well short of the £300m to £320m the group was expecting.

Sales fell by almost a fifth to £1.7bn. The group expects to make profits of between £260m and £300m this year. The shares sank 3.2 per cent, or 155 pence, to 4,748 pence.

Unlike Croda, McBride raised its profit forecasts as consumers flocked to buy more affordable dishwasher tablets, bleach and laundry detergent instead of spending money on brand-name versions.

The manufacturing group, which makes cleaning products sold in supermarkets, expects its annual profit to be 10 to 15 percent higher than previous forecasts.

Revenue rose 9.8 per cent to £468m in the six months to the end of December and returned to a £30.5m profit, after previously making a £1.3m loss. pounds sterling during the same period of the previous year. The shares rose 20.4 per cent, or 15p, to 88.6p.

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