BAT FY20 Profit Rises, Volume Down; Sees Weak Volume Ahead; Stock Dips

British American Tobacco plc reported Wednesday higher profit in its fiscal 2020, despite slightly lower revenues with weak volume. Looking ahead for fiscal 2021, the company expects growth in constant exchange rates, while global tobacco industry volume is expected to be down around 3 percent. The shares were losing around 5 percent in London trade as well as in pre-market activity on NYSE.

For the new year, the company expects mid-single figure adjusted earnings per share growth and revenue growth of 3 percent-5 percent, both at constant currency rates. The company further sees continued progress towards its New Categories revenue target of 5 billion pounds in 2025.

British American said the US market volume will dependent on COVID-19 uncertainties.

Post COVID-19, the company is confident in its guidance of 3-5 percent revenue and high single-figure adjusted earnings per share growth at constant currency.

Jack Bowles, Chief Executive, said, “We are proud that we now have 13.5 million consumers of non-combustible products, a growth of 3 million – doubling the rate of consumer adoption in the second half of 2020. We are well on track to meet our ambition of 50 million consumers of our Non-Combustible brands worldwide by 2030.”

Further, the company announced full year dividend of 215.6 pence per share, up 2.5 percent.

The company also said it is well on track to deliver its ambitious 1 billion pounds of savings by 2022.

For fiscal 2020, profit attributable to shareholders increased to 6.40 billion pounds from last year’s 5.70 billion pounds. Earnings per share climbed 12 percent to 278.9 pence from 249 pence a year ago.

Adjusted attributable profit was 7.61 billion pounds or 331.7 pence per share, compared to 7.42 billion pounds or 323.8 pence per share a year earlier.

Profit from operations grew 10.5 percent from last year to 9.96 billion pounds, and adjusted profit from operations grew 4.8 percent to 11.37 billion pounds.

Operating margin of 38.6 percent improved 380 basis points, and adjusted operating margin of 43.7 percent improved 100 basis points.

Revenue edged down 0.4 percent to 25.776 billion pounds from last year’s 25.877 billion pounds. Revenues grew 3.3 percent at constant currency rates.

New Categories revenues climbed 15 percent from last year to 1.44 billion pounds. Total Non-Combustibles revenue increased 11.3 percent to 2.60 billion pounds.

Total Combustibles volume was down 4.5 percent to 658 billion, Cigarettes and THP volume fell 4.3 percent, and Traditional Oral volume dropped 0.9 percent.

In the US, Group cigarette volume was up 0.5 percent to 73 billion, due to the performance of the strategic portfolio.

In London, British American Tobacco shares were trading at 2,622.50 pence, down 4.6 percent.

In pre-market activity on NYSE, the stock is trading at $36.72, down 5.07 percent.

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