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).
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.
By Eirini Vlanti
While biodiversity is quickly becoming the new climate change in terms of the growing recognition of and urgency around this topic, it presents significant challenges for companies whose business relies on nature.
According to the 2023 Global Risks report by the World Economic Forum, biodiversity loss and ecosystem collapse are the main risks that will appear in a 10-year horizon. With half the world’s GDP highly dependent on nature, we can now see the same trend of goals, target-setting and regulations that were created to address climate change happening to address nature loss but much faster.
Because climate change and biodiversity are highly interconnected, it is difficult to address climate change without taking biodiversity into consideration. Any company relying on agricultural production strongly depends on nature resources and ecosystem services. Discussing how to halt and reverse nature loss is key to securing a resilient supply chain.
Investors are also paying ever greater attention to biodiversity in terms of their assessment of a company’s ESG risks. Investors have different levels of understanding and ambition when it comes to nature. BAT aspires to shape the narrative together with investors, utilizing the available supporting tools, frameworks and data.
In addition, biodiversity-related reporting requirements are growing, demanding that companies dedicate significant resources to this. In 2023, for example, BAT plans to start disclosures aligned with the Taskforce for Nature Related Disclosure while working through water and land guidance for target-setting aligned with the Science Based Target Network. Both frameworks are important tools to standardize the way companies report and enable companies and investors to have greater insights.
Both these frameworks are currently voluntary, but they are already starting to feed into standards, and we are seeing the first signs of these approaches being encapsulated in law, for example through the EU’s Corporate Sustainability Reporting Directive. The EU has started engaging with the main workstreams around this, and its laws are likely to influence legislation in other jurisdictions.
The proliferation in sustainability requirements can also contribute to potential ESG reporting “fatigue.” My view is that biodiversity is nothing new; it is a way to address existing climate change commitments and environmental risks. Since the external environment shows biodiversity is an emerging topic to follow, companies need to decide whether they wait for regulations to enter into force or get ahead by exploring and understanding the topic before that happens.
At BAT, as with any other material topic as identified through our double materiality assessment, we define what “good” looks like, set our ambition and then resource it accordingly. Sustainability is such a wide topic that each company needs to continuously and ruthlessly prioritize its focus area and create a roadmap to deliver against it. Biodiversity is no different.
We began with assessing the materiality of biodiversity loss by conducting a Biodiversity Footprint Analysis as well as Geospatial Biodiversity Risk Assessment in 2022, combining different aspects of biodiversity to classify the farms of our directly contracted farmers as low risk, medium risk or high risk to biodiversity. This exercise supported us on designing and implementing more than 700 Biodiversity Management Plans together with our farmers for the farms that were classified as high risk. This has been a great educational tool for the farmers and our field technicians, and at the same time it provided guidance, based on data, as to where we should be putting more efforts.
There are major differences, however, in terms of how we adapt our approach to the varied challenges in each region. Unlike climate change, where the ultimate metric is greenhouse gas emissions, there is no equivalent metric to measure biodiversity. Challenges in nature are location-specific, and an adverse action for biodiversity can have different impacts depending on the location and the significance of the ecosystem. Nature is not only our home but also the home of countless plants, trees, animals and insects.
When we started looking at biodiversity in this way, it became clear to us the importance of working with local stakeholders, communities and experts to make the most out of every initiative. In the case of forests and biodiversity, we have a long history of community-based afforestation programs. Here, our role has been to transform those initiatives to demonstrate that they are far more than just “corporate engagement.” For example, Bonayan in Bangladesh, a program spanning more than 40 years, supplied over 100 million saplings to the local communities during that period. The program, which currently has 18 afforestation, biodiversity and conservation initiatives in 13 countries, is now moving into Bonayan 2.0 to expand its impact on nature.
Through our integrated production system, we have been working with the farmers to protect biodiversity and forest resources, training them on sustainable agricultural practices and monitoring the sustainability of the wood used for curing.
BAT is making progress, though we anticipate much more work ahead to address biodiversity challenges. I predict soil conservation—marked on Dec. 5 each year by the United Nations’ World Soil Day—will become a key area of importance in biodiversity. The millions of organisms that live within soil support habitats for all species and life forms. The mindset that biodiversity is a philanthropic activity needs to change—biodiversity is not a “nice to have”; it is a “must have” to achieve prosperity in the future for the environment and society and to continue supporting our needs in the years to come. Simplification and alignment of metrics is also necessary; we cannot improve something we cannot measure.
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.”
BAT took a big hit from the sale of its Russian and Belarussian assets, according to CEO Tadeu Marroco, reports Reuters.
During a Dec. 6 trading update, Marroco said that the proceeds received by BAT represent only a fraction of the Russian and Belarussian businesses’ true value
In September, BAT sold the assets to a consortium led by its Russian local management team, ending an 18-month long process to exit the world’s fourth-largest cigarette market following Russia’s invasion of Ukraine.
At the time, BAT did not disclose the sale price or whether the deal included a clause allowing the company to buy back the businesses at a later date.
Marroco noted that the company was unlikely to exercise the sales contract’s buyback option because Russian authorities restricted this to two years.
The company had already recognized £629 million pounds ($792.35 million) in impairments and associated costs related to the sale by the time the deal was announced
Philip Morris International and BAT have entered into a contract manufacturing agreement for cigarette production in Neuchatel, Switzerland, reports Le Temps.
“[L]imited volumes of BAT cigarettes will take place in the PMI factory located in Neuchatel,” BAT wrote in a press note cited by the newspaper. “This is an agreement specific to the Swiss domestic market.”
Only part of the cigarette volumes intended for the Swiss market will be produced in Neuchatel; the rest, as well as previously exported volumes, will be manufactured in other BAT factories.
Six positions will be added at the Boncourt site, according to BAT, bringing the total number of positions at the site to about 20.
BAT Switzerland announced this summer that it would maintain its warehouse and shipping department in Boncourt. The company’s head office remains in the canton of Jura.
Serpil Timuray has joined the board of BAT as an independent nonexecutive director and as a member of the nominations and remuneration committees.
Timuray is currently the CEO of Europe Cluster and a member of the executive committee at Vodafone Group. She joined Vodafone in 2009 and has held a variety of executive roles being the group chief commercial operations and strategy officer in charge of areas including global strategy, marketing, innovation and digital transformation, the regional CEO for Africa, Middle East, Asia, Pacific, and the CEO of Turkiye.
Prior to joining Vodafone, Timuray was the CEO of Danone Dairy Turkiye, having started her career in 1991 at Procter and Gamble, where she held several marketing roles. Timuray is currently nonexecutive director of TPG Telecom. She previously served as an independent nonexecutive director of Danone Group from 2015 to 2023 and as the chair of the corporate social responsibility committee.
“I am pleased to welcome Serpil Timuray to our board,” said BAT Chair Luc Jobin in a statement. “Her extensive experience in growing consumer and enterprise product companies in technology and fast-moving consumer goods sectors and in managing global strategy, innovation and digital transformation will be beneficial to the board as we continue to accelerate our strategy to build ‘A Better Tomorrow.’”
BAT is urging the U.K. to introduce new regulations that the company believes will help the country achieve its “smoke-free” ambitions.
England wants to reduce smoking prevalence to 5 percent of less by 2030, with Wales targeting a similar timeline and Scotland four years later.
Ahead of the consultation on the Tobacco and Vapes Bill that ends Dec. 6, BAT is now publishing proposals that seek to minimize the underage appeal of, and access to, vapor products, along with the environmental impact of single-use e-cigarettes.
In addition to a ban on dessert and soft drink flavors for vapes, the company is calling for an end to marketing slogans and imagery involving toys, cartoons and sweets.
“Vaping is the key to unlocking the U.K.’s smokefree target,” said Asli Ertonguc, BAT lead for the U.K., in a statement. “As the largest manufacturer of vaping products in the U.K., we are clear on our responsibilities and are urging the government to introduce more stringent vaping regulations. We believe that underage users should never vape, so we want confectionery, dessert and soft drink flavors to be banned and the introduction of a new regime for how and where vapes are sold.”
In practice, this would mean requiring vape sellers to have a retail license, similar to that in place with alcohol and cigarettes, and which would be revoked if they were found to be selling to anyone underage, according to BAT. Retailers would also have to demonstrate to Trading Standards that they observe either Challenge 25 protocols or new technologies at point-of-sale locations which verify age, such as facial recognition cameras.
In addition to tackling underage vaping, BAT also wants vapes to be made more environmentally responsible. BAT wants it to be mandatory for single use vapes to have removable batteries, to make recycling more straightforward.
Five million single use vapes are thrown away each week in the U.K. according to 2023 research from recycling campaign group Material Focus—a fourfold increase since 2022. But only 17 percent of vapers recycle in the correct recycling bins, according to the same data.
Finally, according to BAT, products shipped to the U.K. should be subject to a mandatory testing program to ensure products are compliant with U.K. regulations before they can be sold.
“We recognize that some want single use vapes banned altogether, but we are concerned such a move would lead to unregulated sales, and less options for adult smokers looking to switch,” said Ertonguc. “Governments should wield their enforcement powers to help re-build confidence in vaping by ensuring adult consumers can buy legitimate products, and suitably penalizing those who fail to comply.”
BFI Holding of the United Arab Emirates has purchased the St. Petersburg asset of BAT, reports Kommersant, citing data from Russia’s Unified State Register of Legal Entities.
According to the Abu Dhabi Global Market registry, one of BFI Holding’s owners is Faruk Ener, who previously was responsible for Russia, Turkiye, the Caucasus, Central Asia and Belarus at BAT.
BAT started operating in Russia in 1991. Three years later, the company began producing its own tobacco products in St. Petersburg. After the start of hostilities in Ukraine in May 2022, BAT announced the suspension of investments in Russia and later transferred the business in Russia and Belarus to a consortium led by the Russian