BATS swings to loss following large impairment costs on US manufacturers

British American Tobacco plunged to a £17,1billion pre-tax loss final yr after recording a higher-than-expected impairment cost on its US enterprise.

The Dunhill and Lucky Strike cigarettes producer reported a £15.8billion loss from operations in 2023, in comparison with a £10.5billion revenue the earlier yr.

Two months in the past, the group warned it was guiding for a £25billion writedown on the worth of a few of its American flamable manufacturers amid declining smoking charges and widespread financial pressures.

Offloading: British American Tobacco mentioned it expects to finish the sale of its Russian enterprise to its native associate this yr

But in annual outcomes revealed on Thursday, BAT revealed it took a £27.3billion hit from the manufacturers, with the rise blamed on overseas alternate actions.

Currency headwinds and weaker cigarette volumes additionally contributed to the FTSE 100 firm’s total income falling by 1.3 per cent to £27.3billion final yr.

But turnover was primarily impacted by the offloading of BAT’s Russian and Belarus companies final summer time to a consortium run by its Russian administration crew.

However, natural gross sales grew by 3.1 per cent at fixed foreign money charges because of strong performances by the agency’s ‘new classes’ unit. 

Revenue from vaping product Vuse jumped by greater than 1 / 4 regardless of the excessive prevalence of illicit single-use merchandise throughout the US.

Meanwhile, gross sales of Velo nicotine pouches climbed by 39 per cent because of a 3.3 million improve in customers and rising common each day consumption in established and increasing markets.

The surge in non-combustible purchases, which now present round one-sixth of BAT’s complete income, helped the group obtain a revenue from its new classes portfolio two years forward of its deliberate goal.

Tadeu Marroco, chief government of BAT, mentioned: ‘2023 was one other yr of resilient monetary efficiency and supply in step with our steerage, underpinned by our world footprint and multi-category technique, regardless of a difficult macro-environment.’

Marroco succeeded Jack Bowles as CEO final May, having spent over three many years on the enterprise, together with 4 years as finance boss and a spell as regional director for Europe and North Africa.

For the present yr, BAT anticipates ‘low single-figure’ natural development in gross sales and adjusted revenue from operations, with the outcome weighted in direction of the second half of the interval. 

British American Tobacco shares had been 6.9 per cent increased at 2,478.5p on Thursday morning, though they’ve fallen by round a fifth over the previous 12 months.

Neil Shah, government director of content material and technique at Edison Group, mentioned: ‘With the sector persevering with to face more and more regulatory and political headwinds, traders are more likely to be questioning their dedication to the inventory given BAT’s latest share worth underperformance.’