BAT profit surges over 61% on tobacco price hikes and rising demand for e-cigarettes

British American Tobacco (BAT) announced part of its financial results yesterday. The data shows that, thanks to rising tobacco prices and a rapid increase in demand for tobacco alternatives, BAT's operating profit grew by 61.4% to £5.94 billion for the six months ending June 30. This significant profit increase is also related to fluctuations in performance from the same period last year, when BAT suffered a £957 million impairment loss due to the transfer of its Russian operations.
BAT reported a 4.4% increase in revenue for the first half of this year, reaching £13.44 billion. Revenue from non-combustible products (such as e-cigarettes and nicotine pouches) now accounts for 16.6% of the group's total revenue, an increase of 180 basis points (1.8 percentage points) compared to the previous fiscal year.
In response, BAT's new CEO, Tadeusz Malok, stated, "After 10 weeks in office, I am pleased with BAT's strong performance in the first half of 2023 and the new energy across the organization. It is a challenging external environment: high inflation and a global slowdown are affecting consumers and businesses. However, our revenue, operating profit, and earnings are all on the rise.
Tadeusz Malok also noted that BAT's new category products (e-cigarettes, nicotine pouches, etc.) have made significant progress. Revenue grew by 29%, and it is now close to breakeven, with the number of consumers increasing by 1.5 million compared to the 2022 fiscal year.
In related official information, BAT pointed out that it has recently undergone a large-scale organizational transformation, restructuring its management to promote more refined execution, broader collaboration, and agility. In this regard, Ge Wu Consumption mentioned in a tweet on June 20, "Transformation Failure! British American Tobacco Restructures Management, New Tobacco Executives All Fired," that executives previously responsible for BAT's U.S. subsidiary Reynolds American and BAT's new categories division (including its popular Vuse e-cigarette devices) have all been dismissed.