Declining sales of cigarettes and growing competition from illegal vapes in the U.S. will likely dent British American Tobacco’s 2024 earnings, the tobacco manufacturer said in a pre-close trading update on June 4.
Analysts estimate BAT will make £27.60 billion ($35.35 billion) in total organic revenue and adjusted operating profit of £12.48 billion for the year, according to The Wall Street Journal.
BAT noted that while the U.S. was showing some early signs of recovery, traditional cigarette volumes were down around 9 percent so far this year across the industry.
Chris Beckett, head of equity research at Quilter Cheviot, told Reuters BAT’s anticipated decline in first-half revenue and profit was “more pronounced” than expected.
The company expects half-year revenue and adjusted profit from operations to fall by low single digits, but says it is on track to deliver its guidance for the full year.
“We expect our performance to be second-half weighted, mainly driven by wholesaler inventory movements related to continued investment in our U.S. commercial actions, as well as the phasing of new launches,” said BAT CEO Tadeu Marroco.
“Our guidance also reflects ongoing macro-economic pressures, particularly in the U.S. market and continued lack of effective enforcement against the growing illicit vapor segment. As a result, we expect our H1 revenue and adjusted profit from operations to be down by low-single digits on an organic, constant currency basis.”