BAT's first half results: operating profit fell 28.3% year-on-year to 4.258 billion pounds, and new tobacco accounted for nearly 18% of revenue

BAT's first half results: operating profit fell 28.3% year-on-year to 4.258 billion pounds, and new tobacco accounted for nearly 18% of revenue

BAT's first-half performance report showed that BAT's revenue in the first half of the year was 12.34 billion pounds, and its operating profit was 4.258 billion pounds, a year-on-year decrease of 28.3%. New tobacco accounted for nearly 18% of its revenue. The company said that despite the strong growth of new categories, the challenges in the US market made it difficult to achieve the 5 billion pound target in 2025.

 

On July 25, the official website of British American Tobacco (BAT) announced its half-year results as of June 30, 2024.

 

For the six months ending June 30, 2024, BAT's revenue was 12.34 billion pounds, down 8.2% from the same period in 2023;

Operating profit was 4.258 billion pounds, down 28.3% from the same period in 2023;

New category revenue was 1.651 billion pounds, and new tobacco (Editor's note: BAT's smoke-free products include brands such as Vuse, glo and Velo) revenue now accounts for 17.9% of BAT's revenue, an increase of 1.4% from fiscal year 2023.

 

The core content of the report is as follows:

 

Revenue fell 8.2% in the first half of the year, mainly affected by the sale of Russian and Belarusian businesses in September 2023 and exchange rate headwinds.

Accelerated growth is expected in the second half of the year, mainly due to the promotion of product innovation, the effectiveness of US business actions in the first half of 2024, and the recovery of wholesaler inventory changes.

Combustion product pricing is solid, and volume and value market share growth in the AME and APMEA regions is offset by performance in the United States.

Reported diluted earnings per share (EPS) increased by 13.8% to 200.3 pence, mainly due to one-time gains from ITC monetization and net financial costs. Adjusted organic diluted earnings per share increased by 1.3% at constant exchange rates.

The monetization of part of the ITC stake has enabled us to launch a sustainable share repurchase program of £700 million in 2024 and £900 million in 2025.

According to BAT, the company is on track to achieve its full-year performance targets for 2024. The company expects global tobacco industry sales to fall by about 2%, and continued weakness in the United States, France and Sudan will be offset by improved prospects in Turkey and Mexico; full-year adjusted operating profit will face a foreign exchange translation headwind of about 4%; net financial costs are expected to be about 1.7 billion pounds due to exchange rate and interest rate fluctuations; total capital expenditure in 2024 is about 600 million pounds; it is expected that our adjusted net debt/adjusted EBITDA ratio will be within the target range of 2.0-2.5 times by the end of 2024.

 

BAT CEO Tadeu Marroco said,

 

"We are building a smoke-free world. We have added 1.4 million consumers to our smoke-free brands to reach 26.4 million, and smoke-free products now account for 17.9% of the group's revenue, an increase of 1.4% from fiscal 2023."

 

"The performance in the first half of 2024 was in line with our expectations, and we are on track to achieve our full-year guidance targets."

 

"We welcome the FDA's approval of our Vuse Market authorizations for Alto devices and tobacco-flavored consumables are in place, demonstrating that the marketing of these products is consistent with the protection of public health. However, the continued lack of enforcement of illegal disposable vaping products in the US, combined with the sale of our business in Russia and Belarus in 2023, means that revenues from the new category are likely to fall short of our 2025 target of £5 billion.

 

"Combustion-based products have been resilient in the AME and APMEA regions, with steady market share gains, but in the US, market share is now showing signs of recovery as a result of our commercial investments, with the rate of decline in value share gradually improving, led by premium products. However, industry volumes for combustible products in the US remain under pressure, primarily due to macroeconomic headwinds and the lack of effective enforcement of illegal disposable vaping products.

 

"While there is more work to do, we are making good progress and I am encouraged that the launch of new categories and the investments we have made in strengthening our US combustible portfolio in the first half are gaining traction. Combined with the expected recovery in US wholesaler inventory changes, I believe this will drive an acceleration in our performance in the second half of the year."

 

"Guided by our well-established strategy, I am confident that we will gradually improve performance to achieve 3-5% growth by 2026 revenue growth and mid-single-digit adjusted operating profit growth on an organic constant currency basis."