BAT expects vaping growth to ignite sales


BAT expects vaping growth to ignite sales

Published Date: 2019-06-13 | Source: Stephen Gunnion | Author: Stephen Gunnion

BAT expects vaping growth to ignite sales

The world's second-biggest cigarette maker says its New Category portfolio will report growth of between 30% and 50% this year.

British American Tobacco says it's on track to deliver a good 2019 financial performance, with revenue and adjusted operating profit expected to grow in line with its guidance. Earnings are also likely to increase by the high single digits at constant exchange rates.

In a trading update as the first half of its financial year draws to a close, the tobacco giant said cigarette sales continued to perform strongly, driven by growth in its Strategic Brands and good pricing. The Strategic Brands portfolio includes Rothmans, Dunhill, Kent, Camel and Lucky Strike, amongst others. However, it's the group's New Category portfolio, which includes e-cigarettes and vapour products like Vype, Vuse and glo, which is expected to drive second-half growth. It said first-half revenue growth from the portfolio was already approaching its full-year guidance range, with an expected acceleration in the remaining six months of the year. It expects full-year growth of about 40% on a constant currency basis.

The group has forecast constant currency revenue growth of between 3% and 5% for the full year, while adjusted operating profit is expected to rise by between 5% and 7%, also at constant exchange rates. Adjusted, diluted earnings per share are expected to benefit from a currency translation tailwind of around 1%.

In the US, it said industry volumes continued to decline within historic ranges, with sales to retail down 5.3% so far this year. It expected full-year industry volumes to be down by 4% to 5% due to earlier cigarette price increases and rising fuel prices. Globally, industry volumes are expected to be down around 3.5%. Previously there were expected to decline by about 3% this year.

Its shares fell 3.1% to R554.28 yesterday.

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