British American Tobacco 1st Half Profit, Revenue Fell Despite New Categories Growth -- Update
July 28 2021 - 3:33AM
Dow Jones News
By Joe Hoppe
British American Tobacco PLC said Wednesday that first-half
pretax profit fell on the back of reduced revenue and a strong
comparative period, although adjusted revenue and adjusted profit
rose.
The tobacco company posted a pretax profit of 4.38 billion
pounds ($6.08 billion) for the first half of 2021 compared with
GBP4.59 billion the prior-year period.
Revenue fell to GBP12.18 billion from GBP12.27 billion.
However, new categories revenue rose 50% to GBP942 million, and
the company expects full-year losses from the segment, which
includes brands such as Vype vapor and Velo oral nicotine pouches,
to narrow.
On a constant exchange rate, revenue rose 8.1% and adjusted
profit from operations rose 5.4%, which the company attributed to
new category growth and a partial recovery from the effect of the
coronavirus pandemic.
BAT--known for its Dunhill, Kent, Pall Mall and Lucky Strike
cigarette brands--backed its earlier guidance of a rise in fiscal
2021 revenue to be above 5% at constant currency, and said it was
on track to making GBP5 billion in revenue in its new categories
segment in 2025.
The company said it had achieved its highest ever
non-combustible product consumer growth over the period, with 11.8%
of its overall revenue now coming from those products, which
include nicotine pouches and vapor products.
BAT said it expects the second half of the year will reflect the
negative effect of its geographic and portfolio mix, and a strong
prior year comparator which offsets the progress from new
categories. It said it expects the full-year tobacco industry
global volume to reduce by 1.5%, rather than 3% as it previously
guided, driven by a strong recovery in emerging markets.
The company said it plans extra investment in its new categories
segment in the second half, and said it was on track to achieve
operating cash flow conversion in excess of 90%. It further said it
has increased its savings target to GBP1.5 billion by 2022.
Write to Joe Hoppe at joseph.hoppe@wsj.com
(END) Dow Jones Newswires
July 28, 2021 03:26 ET (07:26 GMT)
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