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British American Tobacco has written off \u00a325billion from the value of its US cigarette business due to people \u00adswitching to smokeless alternatives and tough trading conditions.<\/p>\n
Chief executive Tadeu Marroco said it is assessing both the \u201cvalue and useful economic lives\u201d of its US cigarette brands, which include Lucky Strike, Newport, Pall Mall and Camel.<\/p>\n
BAT believes they will only have value for another 30 years and Marroco said it had become \u201cvery difficult to defend\u201d the \u00a380billion valuation the brands have on its balance sheet. He said: \u201cThe accounting is basically catching up with the reality of the US market.\u201d<\/p>\n
Aside from people being aware of the health risks, BAT\u2019s US business has suffered as inflation has made smokers switch to cheaper brands and the rise of \u201cillicit modern disposable\u201d vapes.<\/p>\n
Additionally, it said the performance of its flagship heated tobacco product Glo has been disappointing. Given the lagging performance of its US cigarettes business, BAT predicts its revenues will see low single digit growth this year.<\/p>\n<\/div>\n
It also expects revenue and profits growth to be weak in 2024. At the same time, BAT\u2019s smokeless products or \u201cnew categories\u201d unit will hit breakeven in 2023, two years ahead of schedule.<\/p>\n
BAT\u2019s wants half of its revenues to come from new categories by 2035 and as around 10% of the world\u2019s one billion smokers use a smokeless product, it says the long-term opportunity is \u201cvast\u201d and will invest accordingly.<\/p>\n
AJ Bell investment director Russ Mould said while BAT had taken a \u00adlong-term view by accelerating \u00adinvestment into smokeless products, it is going to weigh on its shares.<\/p>\n
He added: \u201cIt\u2019s going to have a negative impact on near-term financial results and so the share price has fallen once again and is down 30% year-to-date.<\/p>\n
\u201cWhile it pays a generous dividend, investors are likely to be questioning their commitment given the poor share price performance and the fact the sector faces regulatory and political headwinds.\u201d<\/p>\n<\/div>\n[ad_2]\n","protected":false},"excerpt":{"rendered":"
[ad_1] British American Tobacco has written off \u00a325billion from the value of its US cigarette business due to people \u00adswitching to smokeless alternatives and tough trading conditions. Chief executive Tadeu Marroco said it is assessing both the \u201cvalue and useful economic lives\u201d of its US cigarette brands, which include Lucky Strike, Newport, Pall Mall and …<\/p>\n","protected":false},"author":1,"featured_media":14581,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"_links":{"self":[{"href":"https:\/\/farratanews.online\/wp-json\/wp\/v2\/posts\/14580"}],"collection":[{"href":"https:\/\/farratanews.online\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/farratanews.online\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/farratanews.online\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/farratanews.online\/wp-json\/wp\/v2\/comments?post=14580"}],"version-history":[{"count":0,"href":"https:\/\/farratanews.online\/wp-json\/wp\/v2\/posts\/14580\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/farratanews.online\/wp-json\/wp\/v2\/media\/14581"}],"wp:attachment":[{"href":"https:\/\/farratanews.online\/wp-json\/wp\/v2\/media?parent=14580"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/farratanews.online\/wp-json\/wp\/v2\/categories?post=14580"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/farratanews.online\/wp-json\/wp\/v2\/tags?post=14580"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}