Vaping company Supreme insisted the Government’s ban on disposable vapes will not affect its business as it issued an upbeat trading update.
Prime Minister Rishi Sunak today said the disposable products would be banned in a move to tackle a rise in young people vaping.
When the news broke this morning, shares in vaping companies including Supreme fell. But Supreme’s share price recovered after the group put out a statement to the Stock Exchange this afternoon, saying the company was prepared for the ban, and announcing a proposed £1m share buyback programme.
The group’s update for the nine months to December 31 hailed an “excellent trading performance” in Q3 and said: “It is now expected that FY 2024 will significantly outperform market expectations, with revenue projected to be at least £225m and Adjusted EBITDA anticipated to reach at least £38m - a doubling from FY 2023's Adjusted EBITDA.”
Manchester-based consumer goods group Supreme said it expected that for the current financial year, a third of its revenue (£75m) would be derived from disposable vapes, accounting for 23% of its Adjusted EBITDA. its other product ranges included vitamins and wellness products, as well as bulbs and batteries.
Responding to the 海角视频 Government's ban on disposable vapes, it said: “Supreme welcomes this clarity and as a responsible business remains ahead of the curve, having already implemented a number of proactive measures, including narrowing and re-naming of flavours and tailoring packaging, as part of an ongoing commitment to eradicate underage vaping and continuing to support adult smokers by providing an affordable, sustainable, safer alternative to smoking.
“Supreme remains confident that vaping is, and will continue to be, the most credible and effective alternative to cigarettes. Supreme has an established suite of fully compliant rechargeable pod systems, produces over 60 million 10ml bottles of e-liquid annually and has already become a principal supplier to the 海角视频 Government’s “Swap to Stop” scheme.
“None of these revenue streams are expected to be adversely affected by the changes proposed by the Government earlier today.”
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Supreme said it expected the disposable vape ban could actually cause a temporary rise in revenue as retailers look to invest in refillable vaping devices.
It said: “The company expects that more than half of disposable vape activity will permanently transition to alternative forms of vaping such as Pods and 10mls, and Supreme will work closely with its retail partners to manage this seamlessly. The board will continue to evaluate the ongoing impact of new regulations within the 海角视频 e-cigarette market as more clarity, particularly in respect of timing, is published.
The group also said it planned to launch a share buyback programme worth up to £1m over the next three months. It said: “This initiative reflects the board’s confidence in the company's future value and our dedication to enhancing shareholder returns.”
Sandy Chadha, chief executive officer, said: “Supreme is at the forefront of the 海角视频 vape market, consistently innovating and expanding our reach. The 海角视频 Government's latest proposals, many of which Supreme has already proactively embraced, support our strategic direction and focus.
“As a responsible vaping supplier, we welcome changes that help prevent underage vaping and will work with our various stakeholders to work through the proposed legislation. Our early initiatives and strong customer partnerships are testament to our resilience and long-term vision.
“We remain extremely excited by the future and believe we are ideally placed to continue to expand both our operational and financial footprint across our key growth markets. The buyback proposed today reinforces the confidence we have in the business across the long term.”