The Lucky Hill and Dunhill cigarettes maker said adjusted operating profit rose 4.8% to £11.37 billion in 2020, while adjusted earnings per share (EPS) grew 5.5% to 331.7 pence, ahead of the FactSet consensus of 330.07 pence.

Full-year revenue was £25.78 billion—3.3% growth at constant exchange rates—beating the FactSet consensus of £25.68 billion. Cigarette volumes fell 4.5% in 2020, but price increases helped sales of traditional tobacco products to rise 2.8%.

The revenue beat was largely driven by the performance of BAT’s ‘new categories’ products, which includes e-cigarettes, heated and oral tobacco. New categories sales rose 15%, led by a 52% jump in vaping sales, including its Vype and Vuse brands. British American Tobacco also raised its full-year dividend by 2.5% to 215.6 pence per share.

However, the company said the Covid-19 pandemic had hit performance, with an estimated 2.5% headwind to revenue in 2020. The World Health Organization and the U.S. Centers for Disease Control and Prevention have warned that smoking increases the risk when it comes to fighting off Covid-19.

BAT said travel restrictions had hit sales in its travel retail segment, while sales in South Africa suffered from a government tobacco ban between March and August. It also felt a more severe impact on consumption in a number of emerging markets due to the pandemic.

Read full article here.

CALLUM KEOWN – BARRON’S – FEBRUARY 17, 2021

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