BAT's transformation continues 'at pace', reiterates FY revenue outlook

Tobacco and nicotine products manufacturer British American Tobacco said on Thursday that its transformation was continuing "at pace", with strong revenue and volume growth driving market share gains.

British American Tobacco stated further growth in its non-combustible product unit saw its consumer base reach 19.4m in the first quarter of the trading year amid continued new category investment, with over £1.0bn invested in the first half.

However, the FTSE 100-listed firm cautioned that full-year global tobacco industry volume was now expected to be roughly 3% lower due to the macroeconomic impact of continuing global uncertainty in Ukraine and Russia. It also said the US industry volume outlook remained uncertain, given rapidly rising gas prices, ongoing macro uncertainties, and a strong prior year comparator.

Despite this, British American Tobacco still opted to maintain full-year guidance for constant currency revenue growth of 2-4%, mid-single-digit adjusted earnings per share growth, and operating cash conversion in excess of 90% of adjusted profit from operations.

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.

"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. In addition, this conflict is increasing global uncertainty and disruption, further exacerbating inflationary pressures on supply chains, impacting consumer consumption and resulting in increased finance costs. While we are not immune to these pressures, we are confident in delivering on our current financial targets, irrespective of the timing of the transfer of our Russian business."

Reporting by Iain Gilbert at Sharecast.com