Shares in tobacco giant British American Tobacco (BATS) moved 0.6% higher to £32.91 after the firm posted a strong set of results for the year ended 31 December 2021 and announced a £2 billion share buy-back.
Group revenue rose by 6.9% to £25.68 billion last year driven by increases in cigarette pricing coupled with significant growth in new categories.
Adjusted profits from operations increased by 5.2% to £11.9 billion, while adjusted earnings per share increased by 6.6% to 329p.
STRONG GROWTH FROM NEW CATEGORIES.
The New Categories business witnessed revenue growth of 51%, with the number of consumers of non-combustible products increasing by 4.8 million to 18.3 million.
Next Generation Products now account for 12% of group revenue compared with just 4% five years ago. Modern Oral and Vape both recorded strong revenue growth of 41% and 59% respectively.
Management forecast that the robust performance from new categories will continue and emphasised it is on target to reach its target of £5 billion of revenue and profitability in New Categories by 2025.
SHARE BUY-BACK
Several large institutional shareholders have been openly arguing that BATS should return some of its excess capital, so today's news of a £2 billion share buy-back this year should provide them with a degree of comfort.
Management also guided towards medium-term revenue growth of between 3% and 5% in constant currency terms and high single digit earnings per share.
During the past three months the BATS share price has risen by 26.6%, which in part explains today’s relatively muted reaction.
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