UK wholesaler goes under

Imperial Brands said yesterday that it was disappointed that Palmer & Harvey (P&H), the UK’s biggest tobacco wholesaler, had called in the administrators.

But in notes posted on their websites, Imperial and Japan Tobacco Inc. each said that the P&H’s demise would not ‘significantly’ affect the delivery of their products because they had contingency plans in place.

‘In October 2017 Palmer & Harvey (P&H) entered a period of exclusivity with the Carlyle Group with the intention of securing significant capital investment,’ Imperial said in its note. ‘We are disappointed to learn that despite Imperial’s on-going support, the directors of P&H have today [Tuesday] appointed administrators.

‘P&H has been a long-standing trading partner in the UK and for several months Imperial has been working to find a solution that provides the business, and its employees, with a sustainable long-term future. ‘Imperial was prepared to explore further alternatives and is disappointed that the other parties have been unable to pursue these to a successful conclusion.

‘We currently estimate that P&H’s decision to enter administration may have a one-off impact on Group operating profit in our current financial year by up to £160 million, the majority of which relates to excise duty which is non-recoverable.

‘We do not anticipate any significant disruption to our UK operations. We have well-prepared contingency plans which will ensure that the on-going supply to Imperial’s retail customers remains unaffected.’

Meanwhile, JT said that P&H delivered about 25 percent of Japan Tobacco International’s volume in the UK but that, because of a contingency plan already in place it did not expect any significant interruption in the supply of its products.

‘The JT Group’s maximum credit exposure as of November 29, 2017 is £148 million,’ JT said. ‘It is not yet possible to determine the financial impacts at this time, as we need to allow the administration process to progress.’