British American Tobacco (BAT) has announced a pretax loss for 2023, citing a previously reported write-down of its U.S. cigarette brands. Despite this setback, the company has expressed confidence in its growth prospects for 2024.
The FTSE 100 cigarette maker, renowned for its Kent, Dunhill, and Lucky Strike brands, reported a pretax loss of £17.06 billion ($21.54 billion) for 2023, compared to a profit of £9.32 billion the previous year. The substantial swing can be largely attributed to an impairment charge of £27.6 billion. Of this amount, £27.3 billion is directly linked to the pressure faced by some of BAT’s traditional cigarette brands in the U.S., as the company shifts its focus towards smokeless products.
In early December, BAT acknowledged that its performance in the U.S. had been affected by smokers transitioning to cheaper nonpremium brands, along with an increase in the use of illegal disposable vapes. The write-down includes well-known brands such as Newport, Pall Mall, Camel, and Natural American Spirit.
On a more positive note, adjusted profit from operations saw a slight increase to £12.465 billion, up from £12.41 billion in 2022. However, this figure fell short of the company’s provided consensus forecast of an adjusted operating profit of £12.595 billion.
BAT’s revenue from new categories experienced a rise to £3.35 billion, up from £2.89 billion. However, this still missed the company’s forecast of £3.46 billion, as indicated by consensus data.
Despite the challenging year, BAT remains optimistic about its future growth prospects in 2024.
BAT (British American Tobacco) reported a decline in revenue for the latest financial year. The company’s revenue decreased from GBP27.66 billion to GBP27.28 billion. This drop can be attributed to the sale of its businesses in Russia and Belarus, as well as foreign-exchange pressures and lower cigarette volumes.
Despite the decline, BAT remains optimistic about its future prospects. The global tobacco industry is expected to see a 3% decline in volume by the year 2024, according to the company’s projections. BAT reaffirms its guidance for low single-digit organic revenue and adjusted operating profit growth for the year.
In an effort to strengthen its business, BAT plans to invest this year. The focus will be on enhancing capabilities, accelerating innovation, and particularly strengthening its presence in the U.S. market. This investment is expected to drive growth in the second half of the year.
Looking further ahead, Chief Executive Tadeu Marroco stated, “We have set our sights on achieving 3-5% organic revenue growth and mid-single digit adjusted organic profit from operations growth by 2026 on a constant currency basis. Throughout this period, we are firmly committed to rewarding our shareholders with strong cash returns.”
In line with this commitment, a dividend of 235.52 pence per share has been declared by the board of directors, representing an increase from the previous dividend of 230.9 pence.