London — British American Tobacco (BAT) on Thursday said it would take a £6.2bn hit from a Canadian lawsuit and warned of “significant” headwinds in Bangladesh and Australia in 2025, sending its shares down more than 7%.
Tobacco companies have faced various legal challenges related to the health consequences of their products and continue to come under pressure from anti-tobacco activism and stricter regulation around the globe.
BAT, the maker of Lucky Strike and Dunhill cigarettes, and some of its rivals were set to pay C$32.5bn to settle a long-running case in Canada, but some parties, including Philip Morris International’s Canadian affiliate, have since objected to the proposal.
In Australia and Bangladesh, meanwhile, BAT said tax increases would hurt its tobacco business.
CEO Tadeu Marroco said these represented “significant regulatory and fiscal headwinds” that would dent its performance this year, but their impact would recede into 2026.
BAT’s investments would also start to pay off by the end of the year, helping bring the company back to its targeted revenue growth of 3%-5% by 2026, he said.
The company expects 2025 revenue to grow about 1% at constant currency rates and performance is projected to be weighted towards the second half of the year.
Analysts said that while BAT’s 2024 results were in line with expectations, its guidance for 2025 was below forecasts.
Investors at least “finally have a line of sight” into what profit BAT’s Canadian division can contribute once the settlement is resolved, Barclays analyst Gaurav Jain said in a note. The case has hung over BAT and other companies in Canada for a decade.
However, objections from some parties to the settlement could see the case drag on, he said. The Canadian case and BAT’s 2025 guidance would affect its shares, Jain said.
BAT stock was down 7.6% in morning trade.
BAT’s full-year adjusted profit stood at 362.5p per share, compared with expectations of 362.2p, according to a company compiled poll.
Reuters
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