British American Tobacco PLC on Thursday maintained its annual revenue guidance but expects global tobacco industry volumes to shrink in 2022.
The company said its transformation continues at pace, with strong revenue and volume growth in all three New Categories driving share gains across key markets.
BAT maintained its 2022 guidance for revenue growth of 2% to 4% at constant currency and mid-single-figure adjusted diluted earnings per share growth at constant currency. At current foreign exchange rates, BAT expects a translation tailwind of 2% on adjusted diluted earnings per share growth for the half year and 5% for all of 2022.
Still, BAT flagged that the global tobacco industry volume is now expected to shrink by 3% in 2022, worse than the 2.5% decline previously forecast, due to the continuing global uncertainty over the ongoing Ukraine and Russia war.
BAT, back in February, had reported its 2021 revenue fell by 0.4% versus 2020, to £25.68 billion. However, it reported a pretax profit of £9.16 billion, up 5.7% from 2020. Its profit was helped by a 15% reduction in net finance costs.
For 2022, BAT was more upbeat. ‘We are highly cash generative. In line with our active capital allocation framework, and in addition to our growing dividend, we are on track to return £2 billion to shareholders through our 2022 share buyback. We are committed to delivering superior long-term shareholder returns,’ said Chief Executive Officer Jack Bowles.
The Dunhill, Kent and Lucky Strike cigarette maker said New Category business is increasingly contributing to its overall performance, and it is confident in delivering its £5 billion New Category revenue and profitability targets by 2025.
BAT provided no new information about its exit from Russia. ‘As previously announced, given the continuing conflict in Ukraine, we are working towards transferring our Russian business in full compliance with international and local laws. Our priority remains the safety and wellbeing of our people in Ukraine and across the wider region,’ CEO Bowles said.
‘In addition, this conflict is increasing global uncertainty and disruption, further exacerbating inflationary pressures on supply chains, impacting consumer consumption and resulting in increased finance costs,’ CEO Bowles added.
Pointing to an optimistic outlook, he said: ‘We are confident in delivering on our current financial targets, irrespective of the timing of the transfer of our Russian business. This is thanks to our well-established multi-category strategy, our strong portfolio of global brands and our resilient, highly cash generative business.’
British American Tobacco shares were 0.3% lower at 3,554.50 pence each in London on Thursday morning.
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