BAT Resilient in Uncertain Times

British American Tobacco (BAT) has achieved all its 2019 financial targets, according to a company press release.

The company has consistently delivered on its high single-figure constant currency earnings growth target and continues to maintain this guidance for 2020, BAT wrote in its statement.

The beginning of 2020 has seen continued volume and value share growth of 40 basis points and 20 basis points, respectively; positive volume growth; and strong price mix with pricing in line with the company’s plan.

Despite the coronavirus outbreak, most BAT factories are open and operating at full capacity. The company has built up an average stock of about two months of finished goods with further stock throughout its wholesale and retail footprint. About 75 percent of BAT’s global revenue is in developed markets where distribution and availability are largely unchanged.

In a small number of markets where mandated by governments, the company’s combustibles manufacturing facilities have faced limited periods of shutdown. To date, though, BAT has seen limited impact on consumer demand, pricing or consumers’ ability to access products. Sales in global travel retail have been significantly impacted, although this represents less than 1 percent of the company’s sales. Only a few governments have restricted the sale of cigarettes in their countries.

BAT is anticipating a reduction in trade and consumer stocks and some effect on industry volume and revenue growth in the second quarter of 2020. This, together with some delayed launches in new categories, means results are expected to be weighted to the second half.

The company expects constant currency adjusted revenue growth around the low end of the 3 percent to 5 percent range in fiscal 2020 and continued progress toward the company’s 2023–2024 ambition of £5 billion ($6.2 billion) in revenue in new categories.