British American Tobacco Revenue Misses Expectations -- Earnings Review
February 22 2018 - 7:45AM
Dow Jones News
By Carlo Martuscelli
British American Tobacco PLC (BATS.LN) reported its 2017 results
on Thursday. The seemingly irreversible decline in the volume of
tobacco products sold continued, which likely contributed to BAT's
share price falling by as much as 5.8% in trading. Here's what we
watched:
REVENUE: The tobacco major missed revenue expectations, with a
reported figure of 20.29 billion pounds ($28.31 billion). Revenue
was forecast to come in at GBP20.59 billion, according to a
consensus estimate provided by FactSet.
PRETAX PROFIT: The producer of Lucky Strike and Dunhill
cigarettes was expected to report GBP7.81 billion in profit before
tax. BAT greatly exceeded those expectations, reporting GBP29.59
billion in profit, although the sharp rise was mainly on gains
related to its acquisition of Reynolds American Inc.
WHAT WE WATCHED
REDUCED-RISK PRODUCTS: The company said that like-for-like
adjusted revenue growth was driven by its next-generation
products--a category that includes reduced-risk products such as
non-burn tobacco and vapor cigarettes--as well as by pricing. It
said that it sees GBP1 billion coming from this category in 2018,
with the figure reaching GBP5 billion in 2022.
VOLUME: Growth in volume of units sold, a target which Jefferies
called the "holy grail" for tobacco companies in an increasingly
health-conscious society, was elusive for BAT. The company said
that the volume of cigarette and tobacco-heating products sold fell
by 2.6% on a like-for-like basis. This was still better than the
market, which according to BAT declined by an estimated 3.5%.
Write to Carlo Martuscelli at carlo.martuscelli@dowjones.com
(END) Dow Jones Newswires
February 22, 2018 07:30 ET (12:30 GMT)
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