Home Business News BAT long-strategy is to move away from traditional cigarettes

BAT long-strategy is to move away from traditional cigarettes

by LLB Finance Reporter
6th Dec 23 11:07 am

British American Tobacco (BAT) are to book an impairment charge of £25 billion on some of their cigarette brands.

Dunhill and Lucky Strike maker linked the charge to “the current macroeconomic headwinds impacting the US combustibles industry.”

They said that their long-term strategy is to move away from cigarettes as BAT are rolling out vapes and heated tobacco products.

The company added, “This accounting adjustment mainly relates to some of our acquired US combustibles brands, as we now assess their carrying value and useful economic lives over an estimated period of 30 years.”

Chief executive Tadeu Marroco said: “In 2023 we continue to expect another year of delivery in line with our guidance.

“I am encouraged by the strong performances of Vuse and Velo, delivering strong volume-led revenue growth, and increased profitability.

“In combustibles, while the US macroeconomic environment remains challenging, I am encouraged that our commercial plans are starting to deliver early signs of portfolio recovery.”

Derren Nathan, head of equity research at Hargreaves Lansdown, said: “Despite weak demand from smokers in the important US market, it’s managed to eke out a year of revenue growth, albeit at the lower end of previous guidance.

“Meanwhile, the rollout of new categories such as vapes, heated tobacco and oral pouches is continuing apace, with breakeven now expected in the current period, two years ahead of the original plan.

“Management now sees these products as the cornerstone of the company’s future, expecting them to deliver half of group revenues by 2035. But that’s a long way off.”

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