Category: Financial

New Categories Boost BAT Half-Year Revenues

Photo: BAT
British American Tobacco reported revenue of £13.44 billion ($17.35 billion) in the first six months of 2023, up 4.4 percent over the figure recorded in the comparable 2022 period. Growth was driven by the company’s “New Categories” segment. Revenue from noncombustible products now accounts for 16.6 percent of group revenue, up 180 base points (bps) versus fiscal year 2022.
BAT’s Vuse and Velo brands enjoyed strong revenue growth, and New Categories’ financial delivery significantly improved, contributing a £201 million increase to group profit as losses reduced.
Reported profit from operations was up 61.4 percent (with reported operating margin up 1,560 bps to 44.2 percent). Adjusted profit was up 3.6 percent at constant exchange rates. Adjusted operating margin was up 40 bps to 44.3 percent.
“Having been in my new role for 10 weeks, I’m pleased with the resilient performance of BAT in the first half of 2023 and the renewed sense of energy across the organization,” said BAT Tadeu Marroco, who assumed the top job in May. “It is a challenging external environment. High inflation and slower global growth are impacting consumers and business. Yet our revenue, profit from operations and earnings are all up.
“We are making great progress in New Categories. Revenues are up by 29 percent, and we are now close to break[ing] even, with consumers of noncombustible products up by 1.5 million versus FY 2022. While it’s encouraging to see continued good performance in vapor and modern oral, we recognize more work is required in heated tobacco.
“I remain confident that New Categories will deliver a positive contribution in 2024. However, we do not expect contribution growth to be linear, as levels of investment will align with the phasing of our big innovation platforms.
“While more focus is required in the U.S., our sequential performance improvement in the critical premium U.S. combustibles business since January 2023 is encouraging.
July 26, 2023
PMI Revenues Up by One-Fifth

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Philip Morris International announced its 2023 second-quarter results.
Reported net revenues were up by 19 percent, excluding currency. Pro forma (including Swedish Match in all periods) adjusted net revenue growth was 11.1 percent, excluding currency. Combustible tobacco net revenue growth was 6 percent; growth was 7.4 percent on an organic basis driven by pricing of over 9 percent.
Market share for heated-tobacco units (HTUs) in IQOS markets were up by 1.6 points to 9.2 percent. Adjusted in-market sales volume for HTUs, which excludes the net favorable impact of estimated distributor and wholesaler inventory movements, was up by an estimated 16 percent.
Total IQOS users at quarter end were estimated at approximately 27.2 million (up by 1.4 million versus March 2023), of which approximately 19.4 million had switched to IQOS and stopped smoking.
Zyn nicotine pouch shipment volume in the U.S. was 89.9 million cans, representing growth of 53.1 percent versus second-quarter 2022 Swedish Match shipments of 58.7 million cans.
Declared regular quarterly dividend was $1.27 per share, or an annualized rate of $5.08 per share.
“Our strong business momentum continued with an excellent second quarter,” said CEO Jacek Olczak in a statement. “Total cigarette and HTU shipment volume grew by 3.3 percent, underpinning double-digit growth in net revenues and currency-neutral adjusted diluted EPS.
“The outstanding performance of Swedish Match—fueled by the growth of Zyn in the U.S.—is accelerating our smoke-free transformation and is complementing IQOS in growing our smoke-free leadership whilst we also deliver resilient combustibles performance with enhanced pricing.
“Our strong fundamentals give us further confidence as we enter the second half of the year, particularly as certain inflationary and operational pressures ease. We are therefore raising our full-year 2023 forecast for organic net revenue growth to a range of 7.5 percent to 8.5 percent and currency-neutral adjusted diluted EPS growth to a range of 8 percent to 9.5 percent.
“As we look to the longer term, we are complementing our smoke-free transformation with the further development of our wellness and healthcare business. While we have experienced some initial headwinds, we remain committed to wellness and healthcare, with a focused strategy on several attractive growth opportunities.”
July 20, 2023
Smoore Issues Profit Warning

Photo: Smoore International Holdings
Smoore International Holdings issued a profit warning for the six months ended June 30, 2023.
The company’s board of directors expects the group’s comprehensive income for the period to be between RMB717.3 million ($100.1 million) and RMB792.8 million, representing a decrease of between 42.7 percent and 48.2 percent from the income reported for the comparable period in 2022.
The adjusted net profit will be approximately RMB741.4 million to RMB816.9 million, representing a decrease of approximately 43.1 percent to 48.4 percent from the prior-year period.
Smoore attributed the decline to a decrease in revenue of 9.4 percent. Revenue from the Mainland China market for the period dropped approximately 96.3 percent, and its proportion to total revenue decreased from approximately 30 percent in the 2022 period to approximately 1.2 percent in the most recent six months.
Although the revenue from Mainland China in the second quarter of 2023 has significantly increased compared with the first quarter of 2023, it is still far below the same period last year.
During the period, the group’s revenue from overseas markets was approximately RMB5.06 billion, representing a steady growth of approximately 28 percent year-on-year. Among them, the revenue from the U.S. market was approximately RMB2.22 billion, representing a year-on-year increase of approximately 26.9 percent.
With the strengthening of supervision and enforcement of noncompliant products, compliant products are expected to gain more room for sustainable growth in the U.S. market.
Revenue from Europe and other markets was approximately RMB2.85 billion, representing a year-on-year increase of approximately 28.8 percent. The group launched disposable products with a better experience under the compliance framework in this market, which were well received by clients and users, and the revenue from this market continued to grow.
The increase in revenue from overseas were insufficient to offset the declines in Mainland China.
July 20, 2023
22nd Announces Reverse Stock Split

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22nd Century Group will conduct a reverse stock split of its outstanding shares of common stock, par value $0.00001 per share, at a ratio of 1-for-15 effective as of 12:00 a.m. Eastern Time on July 5, 2023. The reverse stock split is intended for the company to regain compliance with the minimum bid price requirement of $1 per share of common stock for continued listing on Nasdaq.
“As a transformative plant science company, being listed on the Nasdaq Stock Market places 22nd Century among the top innovation-driven companies of the world. The board decided to take action now to resolve our compliance with the Nasdaq listing standards, providing investors with greater assurance around this important asset even as we continue to advance our mission focused on plant biotechnology and health improvement,” said Nora Sullivan, chair of the board, in a statement.
“As [we] move into the second half of 2023, we are advancing the rollout of our VLN products in the three largest state markets as we further expand our commercial footprint,” said James A. Mish, CEO. “We also expect to benefit from our new extraction capabilities and the return of distillate production in our hemp cannabis business, plus expansion in our new multi-year vertically integrated license and distribution agreements with two major consumer brands. Combined, we are tracking to our full-year outlook of a record $105 [million] to $110 million in sales.”
22nd Century common stock will begin trading on a reverse stock split-adjusted basis at the opening of the Nasdaq Capital Market on Wednesday, July 5, 2023. Following the reverse stock split, the common stock will continue to trade on Nasdaq under the symbol “XXII” with the new CUSIP number, 90137F202.
In connection with the reverse split, the company will reduce its authorized number of shares of common stock at that same ratio as the reverse split, resulting in 33,333,334 authorized shares of common stock (from 500,000,000 authorized shares). No fractional shares will be issued in connection with the reverse stock split and all such fractional interests will be rounded up to the nearest whole number of shares of common stock. In addition, the reverse stock split will apply to the common stock issuable upon the exercise of the company’s other outstanding securities, with proportionate adjustments to be made to the exercise prices and number of derivates securities, and under the company’s equity incentive plans.
The reverse stock split will consolidate the number of issued and outstanding shares of the company’s common stock to approximately 15.9 million.
July 5, 2023
Tanzania Bank Pledges to Support Farmers

Image: Tobacco Reporter archive
Tanzania’s CRDB Bank promised to continue improving agriculture financing, reports The Citizen.
The bank has loaned TZS129 billion ($53.6 million) to tobacco farming from January 2023 to June 2023.
“We recognize that agriculture is the backbone of our national economy, and we have dedicated significant efforts to support it, including our successful Fahari Kilimo account with numerous benefits,” said Xavery Makwi, CRDB’s director of credit, at the opening ceremony of the bank’s new branch in Igunga. “This branch will be the gateway to economic opportunities for the people of Igunga, helping them improve their income.”
“Many residents of this district depend on agriculture, so the opening of this branch will enhance productivity if more people can access loans with low interest rates below 10 percent provided by CRDB Bank,” said Ambassador Batilda Burian, Tabora regional commissioner.
June 26, 2023
Kaival Reports Flat Quarterly Revenues

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Kaival Brands Innovations Group reported revenues of $3 million in the second quarter of fiscal 2023, down from $3.1 million in the comparable 2022 quarter. Gross loss was $100,000 compared with a gross profit of $400,000 in the prior-year period.
While sales were slightly down versus the prior year quarter due to customer credits, discounts and rebates, Kaival believes that continued U.S. Food and Drug Administration enforcement of noncompliant electronic nicotine-delivery system products has allowed the company to position its Bidi Stick as a compliant alternative subject to FDA enforcement discretion. The company believes this should also help in securing new orders for the Bidi Stick.
“We remain excited and confident in the future of Kaival Brands,” said Eric Mosser, president and CEO of Kaival Brands, in a statement. “Over the past four months, we signed new broker and distribution agreements for our core Bidi Stick distribution business, focusing on partners that share our vision of regulatory compliance and youth access prevention. We believe we have positioned ourselves for increased sales in the second half of the year.”
In addition to its quarterly results, Kaival announced the renewed distribution of its Bidi Stick in Circle K convenience stores. “As of this week, we have activated over 1,000 new Circle K locations, with the goal of ramping up to 5,000 this year,” said Mosser.
The company also announced the initial shipment of Bidi Sticks to over 900 Kwik Trip and Mapco locations.
June 15, 2023
Sampoerna Sales Up 12.5 Percent

Photo: Taco Tuinstra
Sampoerna reported net sales of IDR111.2 trillion ($7.38 billion) in 2022, up 12.5 percent from the previous year. Sales volume at the Indonesian cigarette manufacturer increased 4.8 percent to 86.8 billion units, bolstered by the performance of premium brands such as Sampoerna A, Dji Sam Soe and Marlboro.
“The combination of Covid-19 with the impact of the double-digit excise tax increases and widening excise tax gaps has resulted in major challenges for the tobacco industry but Sampoerna remained focused on creating values for its stakeholders, Sampoerna President Director Vassilis Gkatzelis told shareholders at the company’s annual general meeting.
“We evolved our strategy in a forward-looking way and delivered a robust topline performance in 2022 with year-on-year volume growth and stabilization of market share despite the headwinds and accelerated downtrading to the lower-taxed Below Volume Tier 1 segment.
“We also reached a critical strategic milestone with our smoke-free products manufacturing facility in Karawang with an investment valued at more than $186 million, which started operations in the fourth quarter of 2022 to fulfill demands both for the domestic market and Asia Pacific.”
Gkatzelis attributed Sampoerna’s 2022 performance to solid business fundamentals, robust route to market and resilient organization. Although the company’s profitability decreased on a yearly basis and is still significantly lower versus the pre-pandemic levels, key profitability metrics improved during the second half of 2022, both sequentially versus the first half and the year before, driven by returning to net positive pricing as of the third quarter of 2022.
The positive momentum continued in the first quarter of 2023 with IDR27 trillion in net revenues and IDR2.2 trillion in net profit, up by 3.1 percent and by 12.8 percent, respectively, compared to the same period last year. In this first quarter of 2023, Sampoerna grew its market share to 28.5 percent, up 0.2 percentage points compared to the comparable 2022 quarter.
Vassilis praised the Indonesian government for providing business certainty through the issuance of a multi-year tobacco products excise policy for 2023-2024. “We certainly wish the government issues future policies that can support the sustainability of the tobacco industry and enable economic recovery to pre-pandemic levels,” he said in a statement.
According to Vassilis, a predictable environment is key when it comes to delivering sustainable value creation for the broader ecosystem, especially for long-standing investors in Indonesia.
“I am proud to share that early this year Sampoerna completed its investment in building a production facility for the innovative smoke-free tobacco products in Karawang, West Java,” he said.
“Additionally, we recently launched the latest technology and innovation of smoke-free tobacco products, namely IQOS ILUMA, through the continuation of IQOS Club with a limited launch in 10 major cities in Indonesia. These are key milestones to mark Sampoerna’s 110 years of presence in the country.”
Indonesia’s facility for heated tobacco sticks is PMI’s first in Southeast Asia and the seventh globally. “Sampoerna’s investment is a vote of confidence in the investment climate of Indonesia,” said Vassilis. “The new factory in Karawang entails further value creation by increasing research capacity, absorbing high-skilled workers, purchasing local tobacco supplies, operating digital service centers, improving export performance and empowering MSMEs [micro, small and medium-sized enterprises] which includes digitalization support and increasing the capacity of traditional retailers,” said Vassilis.
June 12, 2023
U.S. Combustibles Hamper BAT

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British American Tobacco (BAT) reaffirmed its annual revenue and profit forecasts on June 6, but acknowledged that its performance in the United States has been hampered by weaker cigarette demand.
“I am pleased with our performance in a number of key areas,” said BAT recently appointed CEO Tadeu Marroco in his first trading update. “We increased the number of consumers of non-combustible products by a further 900,000 in Q1, driving good revenue growth and further reducing losses of New Categories means we are on track to deliver our £5 billion [$6.2 billion] revenue ambition in 2025, with profitability in 2024, irrespective of the timing of the transfer of our Russian and Belarusian businesses.
“Outside the U.S., combustible brands have been performing well as we address portfolio gaps and optimize pricing. Consistently driving value from our combustibles brands is critical, as they deliver substantial cash returns and generate value to fund New Categories and our transformation.
“We are also making good progress towards de-leveraging our balance sheet, supporting our ambition to sustainably return excess cash to shareholders.

Returning combustibles to consistent value creation is critical to our multi-category strategy in the U.S.
Tadeu Marroco, CEO, BAT
“That said, there are operational issues that will have my focus. Our performance in U.S. combustibles has been disappointing. Returning combustibles to consistent value creation is critical to our multi-category strategy in the U.S. We are taking action, and while it will take some time to carefully and thoroughly implement our plans, our volume share has grown sequentially since the start of the year.”
BAT has been affected by a voter-approved ban on flavored tobacco products in California, but reported increased sales of flavored products in neighboring states.
BAT has been investing in e-cigarettes and heat-not-burn devices as consumers transition to tobacco-free alternatives. While its Glo tobacco heating product’s volume share decreased, sales of Vuse vapes grew.
However, government regulations and the risk of illicit sales pose challenges to these alternatives, according to BAT.
The company maintains its outlook for a 3 percent to 5 percent rise in 2023 organic revenue at constant currency rates and mid-single digit growth in adjusted earnings per share.
June 6, 2023
Pyxus Exceeds Guidance for 2023

Pieter Sikkel | Photo: Pyxus International
Pyxus International reported sales and other operating revenues of $1.91 billion in 2023, up 16.8 percent from the prior fiscal year. Average gross profit per kilo increased 13 percent primarily due to product mix in Asia and customer mix in North America. Operating income increased $52.1 million to $93.8 million from the prior year. Net loss attributable to Pyxus International was $39.1 million, improving 52.4 percent from the prior fiscal year.
“Our teams achieved strong results for the fiscal year as we exceeded our most-recent adjusted EBITDA guidance, improved our leverage ratios, and aggressively managed our working capital to improve both our operating and free cash flow,” said Pyxus President and CEO Pieter Sikkel in a statement.
“We experienced the third consecutive year of La Nina weather patterns, which limited tobacco supplies and increased tobacco costs by as much as 50 percent in some of our markets. Inflationary tobacco costs, increasing interest rates, and lingering geopolitical issues added to a complicated crop year. We successfully overcame these challenges.”
“We offset reduced production in certain markets by sourcing tobacco from our global network of farmers around the world to meet our customers’ demand for sustainably grown compliant leaf in a short crop year. Uncommitted inventory at year-end was $19 million, which reflects the short-supply and high-demand environment we operated in during fiscal 2023.
Pyxus said it expects the momentum created this year to continue through fiscal year 2024. Current projections reflect a partial recovery of the tobacco supply compared to last year and continued strength in demand and pricing. For the full 2024 fiscal year, Pyxus expects sales to be between $1.9 billion and $2.1 billion and adjusted EBITDA to be between $155 million and $180 million.
June 6, 2023
Universal Reports ‘Good’ 2023

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Universal Corp. reported sales and other operating revenue of $2.57 billion in 2023, up 22 percent over that recorded in the previous fiscal year. Operating income rose 13 percent to $181.1 million. Tobacco operations contributed $2.26 billion to the company’s sales and operating revenues compared with $1.84 billion in 2022. Operating income for the tobacco operations segment increased by $15.1 million to $172.9 million.
“Fiscal year 2023 was a good year for Universal,” said Universal chairman, President and CEO George C. Freeman III in a statement. “Tobacco shipments were strong as logistical constraints eased in fiscal year 2023, and despite tight tobacco supply conditions, we were able to secure the leaf tobacco needed by our customers. Our plant-based ingredients platform continued to perform well, and we are excited about our progress in integrating our ingredients companies and executing our strategies.
“During fiscal year 2023, we enhanced and increased the scope of our platform by adding sales and research and development resources, and we recently announced plans to expand our plant-based ingredients platform’s manufacturing capabilities.
“Our results for fiscal year 2023 and the quarter ended March 31, 2023, included a favorable final ruling on a legal case involving one of our subsidiaries in Brazil regarding the exclusion of certain tax credits on exported goods in the calculation of taxable income. As a result of the favorable ruling, we recognized $5 million of interest income and a $24.2 million net income tax benefit in the quarter ended March 31, 2023.”
May 25, 2023