British American Tobacco (BAT) says it expects to deliver improved revenue in its new category and combustibles units in the second half of its financial year, and confirmed it was on track to deliver full-year guidance.
BAT, whose brands include Lucky Strike, Rothmans, Dunhill and Kent, said on Wednesday that the second-half acceleration was in line with its expectations, driven by its new categories, which included vaping products, the benefits of investments made in the first half in US commercial actions and the unwinding of wholesaler inventory movements.
CEO Tadeu Marroco said the company continued to make progress towards its ambition of becoming a predominantly smokeless business by 2035.
“Our quality growth imperative is delivering higher returns on more targeted investments across all three new categories, and that prioritisation and focus is already transforming our business in Europe,” he said.
“We are making further progress increasing profitability across new categories, and I am particularly pleased with the improvements in heated products and modern oral. In the US, I am encouraged that our investment approach, taken over the last 18 months to strengthen our business, is working, despite a challenging macroeconomic backdrop,” he added.
Marroco said that while the global tobacco industry volume was expected to be down about 2%, BAT expected low-single figure organic constant currency revenue growth.
Reuters reported that BAT, along with Philip Morris and Japan Tobacco, was set to pay C$32.5bn to settle a long-running tobacco lawsuit in Canada, as part of a proposed plan by a court-appointed mediator, Philip Morris said in October.
Marroco said on Wednesday that BAT expected to have more clarity on the financial effects of the settlement when it provided its 2025 guidance with the annual results in February.
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