British American Tobacco narrows losses for cigarette alternatives as it invests £1bn in vapes and reduced risk products
Vogue cigarette maker British American Tobacco narrowed losses this morning for its alternative cigarettes as the firm invests £1bn in the first half of the year.
New Categories, which includes reduced risk products, saw revenue and volume growth across all three brands: Vuse, Velo and Glo. Losses in the division continue to fall and the group remains on track to deliver £5bn revenue by 2025.
Vuse is now value share leader in the US, extending global leadership position. aunched Vuse Go in the UK back in May, the new Vuse disposable product.
In its half year results, British American Tobacco (BAT) said its non-combustible product consumer base reached 19.4m in the first quarter, with a strong performance in its New Category revenue and volume growth.
Chief Executive Jack Bowles said: “We are proud that BAT’s transformation continues at pace, with strong revenue and volume growth in all three New Categories driving share gains across our key markets. We are leveraging the strength and increasing scale of our three global drive brands, and are continuing to reduce New Category losses”.
Group cigarette value share was notably up 10 per cent in the year to date, with BAT still selling household cigarette brands like Vogue, Pall Mall, and Rothmans International.
“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”, Bowles said.
However, admitting that BAT isn’t immune from the inflationary and supply pressures that are exasperated by the war, full year global tobacco industry volume is now expected to be down around three per cent due to the macro-economic impact of continuing global uncertainty over Ukraine and Russia
Meanwhile US industry volume outlook remains uncertain, given rapidly rising gas prices, ongoing macro uncertainties and a strong prior year comparator.
Commenting on the results, Neil Shah, Director of Research at Edison Group said: “Given these significant pressures, investors will keep a close eye on whether BAT can deliver on its maintained FY guidance of 2-4 per cent revenue growth.
Management also reassured shareholders that it is on track to deliver its £2bn 2022 share buyback programme. This positive outlook may be encouraging for some, but nevertheless the group faces an undeniably tough operating environment.”
Weighing in on the results, Equity Analyst at Hargreaves Lansdown Matt Britzman said: “Having three strong next-gen brands helps put BATS in a leading position to capture a consumer that’s more health conscious than ever, and it’s important the division keeps harnesses this momentum as the traditional tobacco market’s in decline, expected to drop three per cent this year”.
Shares dipped just over one per cent this morning.