BAT sticks to dividend policy and earnings target

British American Tobacco said it was sticking to its dividend policy as the cigarette and vaping company predicted solid earnings growth for 2020.

In a statement to coincide with its annual general meeting, BAT said the Covid-19 emergency had had little impact on consumer demand, pricing or access to products.

The FTSE 100 company predicted adjusted earnings would grow by high single figures in 2020 at constant currency, in line with its target.

The maker of Dunhill and Lucky Strike cigarettes said it intended to pay out 65% of adjusted diluted earnings in dividends in line with its existing policy. The dividend will grow in sterling terms, BAT said. More than a third of FTSE 100 companies have cut, scrapped or delayed dividends during the Covid-19 crisis, including Sainsbury's and the UK's banks.

"Overall, and considering the challenging environment, our business is resilient, competitive and performing well, and we are confident in delivering another good year of adjusted diluted high single figure earnings per share growth in constant currency," BAT said.

Revenue growth will be at the low end of BAT's 3-5% target as cigarette volumes decline slightly faster than expected. Revenue will grow slower than expected in the second quarter with results weighted towards the second half, BAT said.