BRITISH AMERICAN TOBACCO P.L.C. By Joe Hoppe
British American Tobacco said it swung to a pretax loss, driven by a previously reported write-down of its U.S. cigarette brands, but backed forecasts for growth in 2024.
The FTSE 100 cigarette maker--which houses the Kent, Dunhill and Lucky Strike brands--said pretax loss for 2023 was 17.06 billion pounds ($21.54 billion) compared with a profit of GBP9.32 billion a year prior. It said the swing was largely driven by an impairment of GBP27.6 billion. Of the impairment, GBP27.3 billion relates to pressure on some of its traditional cigarette brands in the U.S., as it shifts focus to smokeless products, it said.
BAT said in early December that its performance in the U.S. had been hindered by smokers switching to cheaper, nonpremium brands and a rise in illegal disposable vapes. The brands being written down included Newport, Pall Mall, Camel and Natural American Spirit, a company spokesperson confirmed at the time.
Adjusted profit from operations edged up to GBP12.465 billion from GBP12.41 billion in 2022. Despite the growth, it skirted under a company-provided consensus forecast of an adjusted operating profit of GBP12.595 billion.
New categories revenue rose to GBP3.35 billion from GBP2.89 billion, missing a forecast of GBP3.46 billion, according to company-provided consensus.
Revenue was GBP27.28 billion compared with GBP27.66 billion, dragged by the sale of its businesses in Russia and Belarus, foreign-exchange pressures and lower cigarette volumes, and partially offset by the increased new categories revenue. Revenue was forecast at GBP27.60 billion, according to consensus provided by the company.
The company said it plans to divest at least part of its 29.02% stake in diversified Indian conglomerate ITC, a shareholding it has retained in some form since the early 1900s.
"We have been actively working for some time on completing the regulatory process required to give us the flexibility to monetize some of our shareholding and will update you at the earliest opportunity," Chief Executive Tadeu Marroco said. The company didn't provide a specific timeline.
BAT said global tobacco industry volume is expected to decline around 3% in 2024, and it backed prior guidance for low single digit organic revenue and adjusted operating profit growth for the year.
The company said it will invest in 2024 to strengthen its U.S. business, accelerate innovation and enhance its capabilities, which it said would weigh its performance to the second half.
"Thereafter, we will progressively build to deliver 3-5% organic revenue, and mid-single digit adjusted organic profit from operations growth by 2026 on a constant currency basis. We are committed to continuing to reward shareholders with strong cash returns throughout this period," Marroco said.
The board declared a dividend of 235.52 pence a share, up from 230.9 pence.
Write to Joe Hoppe at joseph.hoppe@wsj.com
(END) Dow Jones Newswires
02-08-24 0320ET
