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UPDATE 3-Gauloises maker Imperial expects profit growth next year after tough 2020

* Imperial expects e-cigarette business to improve after tough 2020

* New CEO working to turn around company

* Shares jump 7% after losing a quarter of value this year (Adds context)

LONDON, Nov 17 (Reuters) - Tobacco company Imperial Brands forecast on Tuesday a return to profit growth next year, helped by expected improvements in its e-cigarette business, which fell dramatically in 2020.

The maker of Gauloises and West cigarettes forecast low to mid-single digit growth in organic adjusted operating profit for 2021. That is broadly in line with expectations, according to Investec analyst Alicia Forry, and would represent a turnaround from a 4.8% decline in 2020.

Imperial shares were up 7% in morning trading. They were down 25% this year through Monday, greatly underperforming Big Tobacco peers.

New Chief Executive Stefan Bomhard, who has been in the top job since July, is working to turn around the British company’s performance, including by bringing in new talent, changing incentive structures and culture, intensifying its focus in its top markets and delivering on its targets.

“There’s a clear strategic imperative from our side that we make promises we can keep,” Bomhard said.

He declined to give details about future strategy, pending the outcome of a “very rigorous, very disciplined and detailed review of the business” and expects to provide more information at a capital markets update scheduled for Jan. 27.

Yet Bomhard did tell analysts not to expect a major margin reset.

In 2020, Imperial’s “next-generation products” business fell by 27%, following a spate of vaping-related illnesses and deaths in the United States and a ban there on flavours of certain e-cigarettes.

The company earlier this year cut its investment in the business, in order to stem losses. It said it expects losses to continue in the business, but at the moderated level seen in the second half of 2020.

Imperial reported adjusted group revenue of 7.99 billion pounds ($10.56 billion) for the full year that ended Sept. 30, up 0.8% on the previous year.

Adjusted earnings per share of 254.4 pence were down 5.6% due in part to writedowns related to its e-cigarette business and reduced profitability in its tobacco business due to the company selling more cheaper cigarettes. ($1 = 0.7565 pounds) (Reporting by Martinne Geller; editing by Louise Heavens, Jason Neely and Susan Fenton)

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