BAT is considering decreasing its 29.02 percent stake in ITC, according to Money Control.
The move would not have a major impact on ITC, according to analysts.
“We don’t need to have more than 25 percent shareholding in ITC to have a strategic influence, including veto rights. Today, we have more than that,” said Tadeu Marroco, BAT CEO.
BAT currently holds ITC shares amounting to INR1.63 trillion ($19.64 billion).
Flashlight Capital Partners (FCP) is urging KT&G to select its next CEO in a more transparent manner.
In a video published ahead of the South Korean tobacco firm’s annual general meeting in March 2024, FCP highlighted what it considered the problems during previous CEO nominations. It lamented the fact that current CEO Beak Bok-in was the only candidate, for example, and criticized the board’s unusually swift 11-day decisionmaking.
FCP also expressed disappointment in the performance of Baek, who has held the position for three consecutive terms. Over nine years, KT&G stock fell by 19 percent while the KOSPI index rose by 26 percent, according to FCP.
The investor questioned management’s “vain pursuit on volume” at the expense of profit, noting a 40 percent revenue growth coupled with a 17 percent decrease in operating profit. FCP pointed to such “lack of profit motive” as a primary cause for the stock’s over 50 percent discount relative to its peers.
To address the shortcomings, Sanghyun Lee, managing partner of Flashlight Capital, suggested allowing sufficient time for a proper candidate evaluation process; considering outsiders with fast-moving consumer goods expertise; and thoroughly documenting the process for the sake of transparency.
“The 11-day CEO nomination is unprecedented in Korea, standing out even among other former government-owned companies,” said Lee in a statement.
In 2022, KT&G rebuffed a request by FCP to spin of its lucrative ginseng business and appoint certain outside directors.
Kenneth Dart, a billionaire investor and heir to the eponymous plastic cup fortune, increased his stake in BAT, reports Bloomberg.
Dart, who is based in the Cayman Islands, now owns more than 10 percent of the company. BAT’s market value is £51 billion ($64 billion).
Investors have asked Pomerantz Law Firm to investigate British American Tobacco for securities fraud after the company announced it would take an impairment charge of approximately $31.5 billion after reassessing the value of certain of the company’s U.S. cigarette brands. On this news, BAT’s stock price fell sharply during intraday trading on Dec. 6, 2023.
The company said the charge—one of the biggest corporate write-downs in recent years—mainly relates to U.S. brands it acquired, as it assesses their carrying value and economic usefulness in the years to come. The brands being written down include Newport, Pall Mall, Camel and Natural American Spirit.
The decline in U.S. cigarette sales has been driven not only by growing health awareness and mounting regulations but also by economic challenges, with consumers downtrading to cheaper brands or illicit products. These trends prompted BAT to adjust the way some of its U.S. brands are treated on its balance sheet, shifting their value to a finite lifetime of 30 years.
Chief Executive Tadeu Marroco described the move as “accounting catching up with reality.”
While he does not believe cigarettes will disappear in 30 years, he said it was no longer possible to justify an indefinite value for those brands equating to around $80 billion on BAT’s balance sheet.
BAT added that it would start amortizing the remaining value of its U.S. combustibles brands in 2024, making it the first of the major cigarette players to acknowledge that its tobacco brands’ value had an expiry date.
BAT will write down the value of some of its traditional cigarette brands by £25 billion ($31.5 billion) to reflect the diminishing outlook for combustible tobacco products.
The company said the charge—one of the biggest corporate write-downs in recent years—mainly relates to U.S. brands it acquired, as it assesses their carrying value and economic usefulness in the years to come. The brands being written down include Newport, Pall Mall, Camel and Natural American Spirit.
The decline in U.S. cigarette sales has been driven not only by growing health awareness and mounting regulations but also by economic challenges, with consumers downtrading to cheaper brands or illicit products. These trends prompted BAT to adjust the way some of its U.S. brands are treated on its balance sheet, shifting their value to a finite lifetime of 30 years.
Chief Executive Tadeu Marroco described the move as “accounting catching up with reality.”
While he does not believe cigarettes will disappear in 30 years, he said it was no longer possible to justify an indefinite value for those brands equating to around $80 billion on BAT’s balance sheet.
BAT added that it would start amortizing the remaining value of its U.S. combustibles brands in 2024, making it the first of the major cigarette players to acknowledge that its tobacco brands’ value had an expiry date.
With only 10 percent of the world’s 1 billion smokers currently using ‘new category’ products, the long-term opportunity for growth as we deliver on our transformation is vast.
While preparing for a future with lower cigarette sales, BAT reported strong volume and revenue growth from its “new category” products, such as e-cigarettes. Vuse’s value market share, for example, increased 100 basis points to 36.8 percent in key markets.
On Dec. 6, BAT announced a new ambition to generate 50 percent of its revenues from noncombustibles by 2025. “With only 10 percent of the world’s 1 billion smokers currently using ‘new category’ products, the long-term opportunity for growth as we deliver on our transformation is vast,” said Marroco in a statement.
The company expects its business from such “new categories” to break even in 2023, a year ahead of its current projection.
BAT expects its full-year revenue growth to be at the lower end of its 3 percent to 5 percent range. It also expects low single-digit growth in revenue and adjusted profit from operations in 2024.
“We will continue to reward shareholders through our strong cash returns, including our progressive dividend, and, once the middle of our leverage range is reached, we will evaluate all opportunities to return excess cash to our shareholders,” Marroco said.
“I am confident that the choices we are making today will drive our long-term success and deliver sustainable value for all of our stakeholders.”
22nd Century Group will sell most of its GVB Biopharma hemp/cannabis operations to Specialty Acquisition Corp., an entity affiliated with GVB employees.
Terms of the transaction include a cash payment to the company of $1 million at closing of the sale and a 12 percent secured promissory note for $1.25 million issued by the buyer. The company plans to use the proceeds from the sale to further deleverage its balance sheet.
22nd Century is also entitled to retain any insurance proceeds received in connection with the fire at the company’s Grass Valley manufacturing facility, a portion of which will be used to offset the buyer’s portion of the shared liabilities.
The sale is expected to close in early December 2023, subject to customary closing conditions, including approval by 22nd Century’s board of directors.
“The sale of our hemp/cannabis franchise will immediately and materially further reduce the cash and operating demands within our business,” said John Miller, interim CEO of 22nd Century, in a statement.
“We expect this transaction will substantially lower 22nd Century’s operating expenses beyond the previously announced $15 million in cost savings initiatives on an annual basis. Additionally, we will retain rights to the insurance proceeds, subject to certain offsets, effectively recouping cash that was invested into the continuity of the hemp/cannabis business.
Juul Labs has raised about $1.3 billion in funding, reports Reuters.
The company has been seeking financing alternatives in a bid to protect its business as it deals with lawsuits related to the marketing of its e-cigarettes.
Earlier this year, Juul announced a company restructuring aimed at reducing operating costs and positioning the company to continue to advance its mission during a period of regulatory and marketplace uncertainty.
In April, the company agreed to pay $462 million over eight years to settle claims by six U.S. states, along with the District of Columbia, that it unlawfully marketed its addictive products to minors.
In November 2022, the company secured funding from some of its early investors to help keep it afloat while cutting about 400 jobs and reducing its operating budget.
Altria Group exited its stake in Juul earlier this year, days before announcing its purchase of Njoy Holdings for about $2.8 billion.
Imperial Brands reported an adjusted operating profit of £3.89 billion ($4.78 billion) for the fiscal year that ended Sept. 30, up 3.9 percent from fiscal 2022 when the impact of foreign exchange fluctuations and Imperial’s exit from Russia were excluded. Adjusted net revenue rose 1.4 percent to £8.01 billion
Imperial CEO Stefan Bomhard expressed satisfaction with the results.
“Three years into Imperial’s transformation, our investments in consumer capabilities, changes to the way we work, and a new performance culture are translating into stronger, more sustainable operational and financial outcomes,” he said in a statement.
“In combustible tobacco, improving brand equity and investment in our salesforce capabilities has led to the third consecutive year of stable or growing aggregate market share in the five priority markets, which account for 70 percent of our operating profit. At the same time, we have offset structural volume declines with strong pricing in all key markets.
“In next-generation products, our challenger approach, which combines partnership-based innovation with disciplined market entry, is delivering positive results. We now have credible propositions across all categories—vape, heated tobacco and oral nicotine. Following recent launches, we now offer consumers potentially reduced-harm choices in more than 20 European markets as well as the United States. This step-up in investment in Europe has driven an acceleration in net revenue growth.
“Underpinning this broad-based progress is our continued transformation, which includes new innovation hubs in Liverpool, Hamburg and Shenzhen, modernization of legacy systems, and investments in upskilling our leaders.”
Pyxus International reported strong top and bottom line results for the quarter that ended Sept. 20. Net income was $8.1 million compared with a loss of $1.54 million in the comparable 2022 period. Sales and other revenues were $624.25 million during the quarter compared with sales and other revenues of $505.28 million in the second quarter of 2022.
“The momentum we built during the first quarter continued in the second quarter,” said Pyxus President and CEO Pieter Sikkel in a statement. “We delivered solid revenue growth, increased profitability, exercised operating discipline and continued to manage working capital efficiency.
Contributing to the company’s performance was a volume increase of 10.2 percent and an increase in average market prices of 11.7 percent over the same quarter last year. The increase in leaf volume was primarily due to the accelerated timing of shipments from North America and South America and growth from Africa and Asia. Pyxus considers the higher pricing to be a feature of a market that remains generally undersupplied. The company believes the undersupplied condition of the market is also evidenced by its success in seizing opportunities to capture additional business.
Buoyed by its quarterly performance, Pyxus revised its guidance for fiscal 2024 upward and now expects full-year sales to be in the range of $2 billion to $2.1 billion and for full-year adjusted EBITDA to be in the range of $170 million to $180 million.
KT&G reported record revenue of KRW1.69 trillion ($1.29 billion) for the quarter that ended Sept. 30, 2023. This reflects a 4 percent increase from the same quarter last year. Operating profit rose 0.3 percent to KRW406.7 billion despite cost headwinds.
Solid performance in combustible business drove the revenue growth as the company’s total combustible revenue, including both overseas and domestic sales, jumped to KRW972.7 billion, a 3 percent increase year-on-year. Operating profit from combustible products recorded KRW269.4 billion, up 0.6 percent year-on-year.
Overseas combustible business delivered impressive growth across all key metrics, including sales volume and revenue. KT&G’s overseas combustible revenue increased 26.3 percent to KRW321.6 billion, and the sales volume recorded 14.82 billion sticks, up 21 percent year-on-year. The double-digit growth in revenue and sales volume of overseas combustible products was mainly driven by strategic pricing and combined growth across export and overseas subsidiary volumes.
The heat-not-burn business also recorded a double-digit increase in both domestic and overseas sales figures. KT&G sold 1.45 billion sticks in the domestic market and 2.03 billion sticks in overseas markets, which represents 13.3 percent and 22.3 percent growth year-on-year, respectively.
In the third quarter, KT&G’s primary focus was on enhancing its financial performance by strengthening the global competitiveness of its core business areas. As part of the effort, KT&G made significant investments in Indonesia and Kazakhstan in September and October.