BAT Reports Results

BAT reported revenue of £12.34 billion ($15.88 billion) for the first half of 2024, down 8.2 percent from the comparable 2023 period. The decline was driven by unfavorable currency exchange rates and the sale of BAT’s businesses in Russia and Belarus following Russia’s invasion of Ukraine.

Reported revenue from new-category products, which include vapes, heated tobacco and nicotine pouches, declined 0.4 percent to £1.65 billion. Smokeless brands now account for 17.9 percent of BAT’s group revenue, up 1.4. percentage points from fiscal year 2023.

Profit from operations was £4.26 billion on a reported basis, down 28.3 percent from the first half of 2023. BAT attributed the decline to its December 2023 decision to write down the value of some of its traditional cigarette brands in the United States to reflect the diminishing outlook for combustible tobacco products, along with its exit from Russia and Belarus.

The company said it’s unlikely to hit its £5 billion revenue target in 2025 for new-category products, blaming fierce competition from illicit vapes in the United States. The U.S. accounted for more than 40 percent of BAT’s revenues in 2023, primarily from traditional tobacco products, according to Reuters.

In a statement, BAT CEO Tadeu Marroco welcomed the U.S. Food and Drug Administration’s recent marketing authorization of its Vuse Alto device and tobacco flavor consumables but expressed concern about the continued lack of enforcement against unauthorized single-use vapes, which makes it difficult for authorized brands to compete in that market.

Nonetheless, Marroco said BAT is on track to deliver its full-year guidance. “Focusing on ‘quality growth’ is delivering better returns on more targeted investments across all three new categories,” he said. “In H1 2024, we increased organic new-category contribution by £165 million—at constant rates—and I am particularly pleased with the growth of modern oral. We expect to deliver further improvement in revenue and profitability across our new categories for the full year.”