British American Tobacco Reports Strong First Half Performance

British American Tobacco (BAT) has announced an impressive financial performance for the first half of the year, driven by its new categories segment. The FTSE 100 cigarette maker, known for its popular brands such as Kent, Dunhill, and Lucky Strike, reported a pretax profit of £5.3 billion ($6.84 billion), surpassing last year’s figure of £3.06 billion.

Revenue for the period also witnessed significant growth, reaching £13.44 billion compared to £12.87 billion in the previous year. This exceeded the company’s own expectation of £13.32 billion. Notably, BAT’s new categories segment, which includes vaping products and oral tobacco, experienced a remarkable 29% rise in revenue, totaling £1.66 billion. This outperformed the company’s projected revenue of £1.57 billion.

Furthermore, BAT highlighted that non-combustibles now account for 17% of its overall revenue, indicating an increase of 180 basis points from the previous year.

However, the company also noted a decline in revenue in the United States by 5.4%, attributable to a 5.7% decrease in cigarette volumes. BAT attributed this drop to macroeconomic pressures in the industry and the implementation of a flavor ban in California.

Looking ahead, BAT remains optimistic about its future performance and expects organic constant currency revenue growth within the range of 3% to 5% for the year 2023. Chief Executive Tadeu Marroco expressed confidence in the company’s progress, particularly highlighting the sequential improvement in the critical premium U.S. combustibles business since January 2023.

Overall, BAT’s strong financial results reflect its successful expansion into new categories and a resilient performance in challenging market conditions.