British American Tobacco Lowers Revenue Growth Forecast
British American Tobacco (BAT) reported that despite solid first-half business performance during the COVID-19 pandemic, it has lowered its full-year adjusted revenue growth forecast. In addition to popular cigarette brands such as Dunhill and Rothmans, t
British American Tobacco (BAT) reported that despite the COVID pandemic, its business performed well in the first half of the year, but it has lowered its full-year adjusted revenue growth forecast.<\/div>
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The world’s second-largest tobacco company sells many electronic devices such as Glo and Ifuse, in addition to popular cigarette brands like Dunhill and Rothmans. The company recently stated that the outbreak of the coronavirus did not affect its revenue, attributing this to the fact that consumers continued to purchase its products even in the most affected countries.<\/div>
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This is not surprising, as smokers and users of nicotine replacement products not only consider these products essential but are also more likely to use them during times of severe pain and high anxiety.<\/div>
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CFO Tadeu Marroco stated that the company did face some manufacturing disruptions in China, where the virus originated, but production resumed once the factories reopened. Marroco added that the main sales decline observed was a negligible part of the duty-free business.<\/div>
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CEO Jack Bowles said during the company’s capital markets day event via webcast: “We do not see any change in cigarette consumption patterns due to COVID-19.” “This is a daily necessity, so consumers continue to shop in stores, even in Italy and France, where tobacco shops are still open.”<\/div>
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British American Tobacco has further lowered its global volume forecast by 2%.<\/div>
Despite these statements, British American Tobacco has now adjusted its revenue forecast for 2020, now expecting growth of 1% to 3%, rather than the previously forecasted 3% to 5%. Articles in the Wall Street Journal reported that tobacco companies expected around 3% growth, adjusting revenue from the Covid situation as a headwind for the year.<\/div>
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Additionally, the company has also lowered its adjusted diluted earnings per share growth to mid-single digits compared to previous high single digits and postponed its revenue target from £5 billion ($6.3 billion) to 2025, with the final expectation of reaching that revenue in 2023 or 2024.<\/div>
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Regarding its expectations for global cigarette and heated tobacco product sales, British American Tobacco stated that it expects them to decline by about 7%, rather than the initially expected 5%.<\/div>
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