British American Tobacco eyes 50m smokeless clients

British American Tobacco has lifted guidance for sales of its smokeless products as demand for the group’s vapes and nicotine care home continues to grow. 

The Rothmans and Lucky Strike owner continues to expect its turnover and adjusted profits from operations to expand by a ‘low-single figure’ percentage this year.

Revenues from traditional tobacco products and new categories are also expected to be up over the latter six months of 2024 compared to the first half.

The FTSE 100 group said that vaping brand Vuse has maintained dominance across the world’s top vapour markets, such as the UK, Germany, and the US.

BAT also noted that its Velo nicotine pouches enjoyed strong volume, sales and profit growth thanks partly to the brand launching in the UK and Poland. 

However, the firm said Vuse and combustibles demand in the US remains affected by the widespread use of illegal vapour products.

Upheld: British American Tobacco reiterated its annual guidance on Wednesday amid growing demand for smokeless products

Like other cigarette sellers, BAT is gradually expanding its alternatives in response to enhanced public awareness of tobacco’s downsides.

It aims to have 50 million consumers using its non-combustible goods, such as vapes and tobacco heaters, by 2030 and derive at least half of its sales from them by 2035.

Tadeu Marroco, chief executive of BAT, said: ‘Our quality growth imperative is delivering higher returns on more targeted investments across all three new categories. 

‘We are making further progress increasing profitability across new categories, and I am particularly pleased with the improvements in heated products and modern oral.’

Marroco further said the company expected to have ‘more clarity on the financial impacts’ of a legal case involving its subsidiary Imperial Tobacco Canada (ITCAN) when it publishes full-year results in February.

In October, BAT revealed it had filed a plan in a Canadian court that could potentially end a major litigation case.

A landmark court ruling in 2015 found that ITCAN, Philip Morris, and Imperial Tobacco were aware of the health problems associated with smoking but did not sufficiently warn their customers. 

The three firms were ordered to pay damages of CA$15.6billion in a case brought by over a million current and former smokers in Quebec, making it one of Canada’s largest ever class-action lawsuits.

British American Tobacco shares were 0.6 per cent up at 2,987p on Wednesday morning, taking their gains this year to around 28 per cent.

Richard Hunter, head of markets at Interactive Investor, said: ‘The group remains committed to a higher level of shareholder returns, including further buyback programmes, despite the investment needed in transitioning the company. 

‘In the nearer term, however, the market consensus is that Imperial Brands remains the favoured play in the sector, with BATS coming in at a hold, albeit a strong one.’