TOP NEWS: BAT expects New Category to star as guidance stays on track

(Alliance News) - British American Tobacco PLC reported on Tuesday it was confident of delivering ...

Alliance News 7 December, 2021 | 8:54AM
Email Form Facebook Twitter LinkedIn RSS

(Alliance News) - British American Tobacco PLC reported on Tuesday it was confident of delivering financial guidance for 2021, with revenue benefitting from strong New Categories volume and revenue growth.

The London-based cigarette maker projected revenue growth at constant currency above 5%, while consumers of non-combustible products will likely increase by 3.6 million year-to-date to September to 17.1 million.

New Categories will contribute to profit growth for the first time as their losses start to reduce, the BAT said.

BAT's New Categories include its tobacco heating brand, alongside its Vuse and Vype vapour products and Velo modern oral products.

In a trading update ahead of closed period starting on January 1, the BAT maintained mid-single-figure constant currency adjusted diluted earnings per share growth guidance for the financial ending December 31.

This strong operational performance allowed the group to absorb the GBP260 million profit hit from excise changes and competitive pricing in Australia and New Zealand, an increase from GBP170 million excise impact in Australia stated at first half 2021.

The maker of Dunhill and Kent expected robust combustible revenue growth, with continued strong pricing, partially offset by geographic mix driven by volume recovery in key lower margin emerging markets post-Covid and lower volume in the US.

The tobacco group saw strong momentum across New Categories, boosting investment to build global brands. New categories include vapour offerings, tobacco heating products, or THP, and modern oral nicotine pouches.

"Benefitting from a continued strong New Category performance, which is now a sizeable contributor to group revenue growth, we are making excellent progress towards our GBP5 billion revenue target by 2025, supported by a clear focus on tobacco heating products," said BAT Chief Executive Jack Bowles.

The BAT expects the full-year global tobacco industry volume to be broadly flat, from a projected 1.5% contraction previously, with the improvement driven by Indonesia. US industry volume expectations maintained at around negative 5.5%

Shares in British American Tobacco rose by 1.6% at 2,667.50 pence in London and was up 1.5% to ZAR561.84 on Tuesday morning in Johannesburg.

By Artwell Dlamini; artwelldlamini@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

Email Form Facebook Twitter LinkedIn RSS

Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
British American Tobacco PLC 3,138.00 GBX 0.79

About Author

Alliance News

Alliance News provides Morningstar with continuously updating coverage of news affecting listed companies.