Investors took the latest update from British American Tobacco (BATS) in their stride, leaving the shares largely unchanged at £27.69, despite signs of further progress in the firm’s push into non-combustible products.

For the six months to June, group revenues rose 8.1% on a constant currency basis to £12.175 billion helped by a 50% jump in ‘new category’ sales to £883 million.


BATS has been at the forefront of the push into non-combustible products with its vaping brands, and registered its highest ever level of new customer acquisition in the first half with 2.6 million new users, taking the total to 16.1 million.

Vaping revenues rose 59%, with the Vuse brand ‘approaching global category value share leadership’ according to the firm.

Chief executive Jack Bowles said, ‘Our rapid growth in new categories is driving significant scale benefits and 2021 is shaping up to be a pivotal year. There is great momentum across the business and we are well on track to meet our targets of £5bn of new category revenue by 2025 and 50m non-combustible product consumers by 2030.’

The company invested another £346m in non-combustible products in the half, funded by revenues from its traditional tobacco business and cost savings from its Quantum programme, where it is running ahead of expectations and has raised its 2022 target to £1.5 billion.


Global tobacco industry volumes are now expected to be 1.5% lower than last year, an improvement from the previous forecast of a 3% fall, driven by a recovery in emerging market consumption.

Yet despite this better outlook and the positive progress made in the first half, the firm left its full year forecast of above 5% constant currency revenue growth unchanged, which hints at a slowdown in the second half, which may explain the lack of investor enthusiasm.

Analysts at Goldman Sachs remained bullish on the stock, reiterating their buy recommendation and £37.00 price target.


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Issue Date: 28 Jul 2021