Top story
British American Tobacco is taking a £25bn one-off hit as it writes down the value of its traditional cigarette brands in the US, the London-listed group said this morning in a trading and strategy update.
The owner of Dunhill, Lucky Strike and Pall Mall blamed macro-economic pressures in the US for driving smokers to cheaper brands and said a “continued proliferation of illicit” disposable vapes also slowed growth in the country.
BAT will take an accounting non-cash adjusting impairment charge of around £25bn this year as a result.
CEO Tadeu Marroco said the move was consistent with the group’s vision to ‘build a smokeless world’.
“This accounting adjustment mainly relates to some of our acquired US combustibles brands, as we now assess their carrying value and useful economic lives over an estimated period of 30 years,” he added. “Accordingly, we will commence amortisation of the remaining value of our US combustibles brands from January 2024.”
BAT confirmed its guidance for group organic revenue growth of 3-5% but said it was now expected to be at the lower end of the range.
Shares in the tobacco giant sank 7% to 2,301.5p as markets reacted to the news.
“In 2023 we continue to expect another year of delivery in line with our guidance,” Marroco said.
“I am encouraged by the strong performances of Vuse and Velo, delivering strong volume-led revenue growth, and increased profitability. As a result, we now expect new categories to be broadly breakeven in 2023, two years ahead of our original target.
“In combustibles, while the US macro-economic environment remains challenging, I am encouraged that our commercial plans are starting to deliver early signs of portfolio recovery.”
Morning update
The FTSE 100 opened 0.3% higher to 7,514.24pts this morning.
Early risers included Just Eat Takeaway, up 4% to 1,266.4p, Ocado, up 2.8% to 614.6p, PZ Cussons, up 1.8% to 149.4p, and SSP Group, up 1.5% to 230p.
Other fallers, alongside BAT, included Naked Wines, down 2.9% to 34p, Nichols, down 2.6% to 1,032p, and Imperial Brands, down 1.2% to 1,841p.
Yesterday in the City
The FTSE 100 fell yesterday by 0.3% to 7,489.84pts.
Shares in travel food-to-go specialist SSP Group jumped 3.5% to 220.3p as it continued a strong recovery from the pandemic.
Tesco rose 1.2% to 284.5p and Sainsbury’s moved 1.5% higher to 289.2p as the latest Kantar release predicted a bumper Christmas for the grocers.
THG dipped 0.2% to 78.1p despite early gains after the group announced it was acquiring prestige skincare brand Biossance.
No comments yet