BAT lifts annual profit growth target as Velo drives U.S. momentum
British American Tobacco's Financial Performance and Strategic Moves
Upgraded Earnings Forecast
July 30 (Reuters) - British American Tobacco on Thursday lifted its annual earnings growth forecast as surging demand for its Velo nicotine pouches and a strong U.S. performance offset a sharp decline in Asia.
The maker of Lucky Strike and Dunhill cigarettes said it now expects full-year adjusted earnings per share growth towards the middle of its 5%-8% medium-term guidance range, a step up from its earlier guidance of the lower end of that range.
Revenue and Profit Guidance
It maintained its guidance for revenue and adjusted operating profit growth at the lower end of their respective 3%-5% and 4%-6% ranges, a move that had disappointed investors in June.
Shares of the company fell as much as 3% in early trading.
Strategic Shifts and Market Adaptation
Investment in Smoking Alternatives
BAT has been grappling with a decline in demand for traditional cigarettes and has poured investment into smoking alternatives to boost profits.
AI-Driven Restructuring
It also undertook a sweeping AI-driven overhaul last month under which it plans to cut around 5,500 jobs and shift roughly 3,500 roles to third parties, including consultancy Accenture, in a restructuring that excludes the United States, its biggest market.
Regulatory Developments in the U.S.
BAT is also expected to benefit from a U.S. FDA move that now allows the sale of some unlicensed vapes, which the company has said opens up a market worth as much as £7 billion.
Performance of New Categories
Growth in Modern Oral and Vapour Products
Its new categories revenue — spanning vapour, heated products and modern oral — accelerated to 18% growth at constant currencies, with modern oral volume share in its top markets rising 8.4 percentage points to 39.2%.
Adjusted Earnings Report
The company reported adjusted earnings of 164 pence per share for the six months to June 30, a 7.9% rise from a year ago, and above a company-compiled consensus of 158.5 pence.
Reporting and Editorial Credits
(Reporting by Yamini Kalia in Bengaluru; Editing by Nivedita Bhattacharjee and David Holmes)
