TIDMBATS
RNS Number : 1173E
British American Tobacco PLC
16 October 2018
This announcement contains inside information
16 October 2018
BRITISH AMERICAN TOBACCO p.l.c.
Update ahead of analyst and investor meetings
British American Tobacco p.l.c. ("BAT") will be hosting a series
of analyst and investor meetings over the coming weeks in which we
will discuss the progress of the business and opportunities ahead.
Ahead of these meetings, BAT provides the following update to the
market:
-- The business continues to perform well and we remain
confident of delivering good adjusted revenue growth on a constant
currency representative basis, mainly driven by the Strategic Brand
Portfolio (which covers our Strategic Combustible and Potentially
Reduced Risk Products (PRRP) brands)
-- We expect to once again exceed our high single figure
constant currency adjusted diluted earnings per share growth target
in 2018
-- BAT continues to deliver good market share gains.
Expectations remain unchanged for industry volume to be down around
3.5% for the full year. In the US, we are performing well, with
growing value share and pricing in line with expectations. US
industry volume decline remains in line with historic ranges and is
expected to be down around 4.0-4.5% for the full year, with a
slight improvement in H2
-- In Tobacco Heating Products (THP), our geographic expansion
continues to progress well with THP revenue expected to grow
substantially. In Japan, the THP category remains flat, however
glo's share is now at 4.4%, up from 3.3% at the start of the
year
-- BAT's global vapour business is expected to deliver double
digit volume and constant currency revenue growth in 2018, on a
representative basis, with Vuse in the US continuing to perform
well driven by the launch of our pod-mod product, Alto, and the
reintroduction of Vibe. Vype continues to grow share, with ePen3
showing promising initial results in the UK and Canada
-- THP and vapour revenue is showing strong growth and is
expected to reach GBP900m of reported revenue in 2018, led by THP.
The revision from the previously announced revenue target of GBP1bn
is largely driven by a reduction in planned year-end stocks in
Japan as the THP category remains flat and the effect of the Vuse
Vibe recall in the US
-- In Oral Tobacco, we expect strong constant currency revenue
growth on a representative basis, with good performances in both
the US and Europe, following the continued success of Epok
-- Full year price mix is expected to exceed the 5.5% achieved
in 2017, supporting good adjusted revenue and adjusted operating
profit growth, on a constant currency representative basis,
weighted to the second half of the year
-- Full year adjusted EPS growth is expected to be impacted by a
currency translation headwind of around 7%, assuming exchange rates
remain unchanged for the remainder of the year
-- De-leveraging plans remain on track and net debt*/adjusted
EBITDA** would be expected to reach around 3X by the end of 2019,
based on exchange rates as at 16 January 2017, the date of the
announced agreement to acquire Reynolds American Inc. However, at
prevailing exchange rates, we expect net debt*/adjusted EBITDA** to
be 3.8-3.9X by the end of this year and reduce to 3.3-3.5X by the
end of 2019. The Group's medium-term rating target remains
BBB+/Baa1
Nicandro Durante, CEO, said: "I am delighted with the progress
we are making with our Potentially Reduced Risk Products business
and we have a great pipeline of new product launches over the
coming months which will build on this success. At the same time,
our combustible tobacco business continues to perform well. We
remain on track for a strong performance in 2018."
Later today, British American Tobacco p.l.c. will host an
analyst lunch briefing in London during which there will be a short
presentation providing an update on the business. Copies of the
presentation will be available on www.bat.com/ir at 12.00pm
BST.
The person responsible for making this announcement is Paul
McCrory, BAT's Company Secretary.
For further information, please contact:
British American Tobacco Press Office
+44 (0) 20 7845 2888 (24 hours) | @BATPress
British American Tobacco Investor Relations
Mike Nightingale / Rachael Brierley / John Harney
+44 (0) 20 7845 1180 / 1519/ 1263
* Net debt excluding the impact of the revaluation of RAI
acquired debt arising as part of the purchase price allocation
process.
**Adjusted EBITDA is not a measure defined by IFRS. Adjusted
EBITDA is profit from operations before amortisation and
depreciation and excluding the impact of adjusting items.
The Group management board believes that this additional
measure, which is used internally to assess the Group's financial
capacity, is useful to the users of the financial statements in
helping them to see how the Group's financial capacity has changed
over the year. Adjusted EBITDA has limitations as an analytical
tool. It is not a presentation made in accordance with IFRS and
should not be considered as an alternative to profit from
operations as determined in accordance with IFRS.
Note on Non-GAAP Measures
This announcement contains several non-GAAP measures used by
management to monitor the Group's performance. Certain of our
measures are presented based on an adjusted basis, on a constant
currency basis and on a representative basis. Please refer to the
2017 Annual Report on Form 20--F for a full description of each
measure, pages 218 to 222, as well as the Half-Year Report to 30
June 2018 on Form 6-K, pages 50 to 53.
For the non-GAAP information contained in this announcement, no
comparable GAAP or IFRS information is available on a
forward-looking basis, as the effect of adjusting items and rates
of exchange, which could be significant, may be highly variable and
cannot be estimated with reasonable certainty. Statements
concerning information presented on a representative basis (i.e.,
information presented as though the Group had owned the
acquisitions made in 2017 for the whole of that year), also apply
to such information when it is not presented on a representative
basis.
Adjusting items, as identified in accordance with the Group's
accounting policies, represent certain items of income and expense
which the Group considers distinctive based on their size, nature
or incidence. These include significant items in revenue, profit
from operations, net finance costs, taxation and the Group's share
of the post--tax results of associates and joint ventures which
individually or, if of a similar type, in aggregate, are relevant
to an understanding of the Group's underlying financial
performance. Although the Group does not believe that these
measures are a substitute for IFRS measures, the Group does believe
such results excluding the impact of adjusting items provide
additional useful information to investors regarding the underlying
performance of the business on a comparable basis.
The Group's management reviews a number of our IFRS and
non--GAAP measures for the Group and its geographic segments at
constant rates of exchange. This allows comparison of the Group's
results, had they been translated at the previous year's average
rates of exchange. The Group does not adjust for the normal
transactional gains and losses in operations that are generated by
exchange movements. Although the Group does not believe that these
measures are a substitute for IFRS measures, the Group does believe
that such results excluding the impact of currency fluctuations
year--on--year provide additional useful information to investors
regarding the operating performance on a local currency basis.
As previously announced, this announcement and other results
communications in 2018 include a presentation of results against
2017 as though the Group had owned the acquisitions made in 2017
for the whole of that year. Comparison of results on this basis
will be termed "on a representative basis" and will provide
shareholders with a results comparison representative of the Group
having owned the acquisitions throughout 2017 and 2018. Although
the Group does not believe that results on this basis are a
substitute for IFRS measures, the Group does believe such results
including the impact of acquisitions as though the acquisitions had
occurred at the beginning of 2017 provide additional useful
information to investors regarding the underlying performance of
the business on a comparable basis. Because of the impact of the
acquisitions made in 2017, we believe statements concerning
non-representative information would be distorted and do not
provide meaningful information to investors regarding the
underlying performance of the business.
Forward-looking statements
This announcement does not constitute an invitation to
underwrite, subscribe for, or otherwise acquire or dispose of any
British American Tobacco p.l.c. ("BAT") shares or other securities.
This announcement contains certain forward-looking statements, made
within the meaning of Section 21E of the United States Securities
Exchange Act of 1934, regarding our intentions, beliefs or current
expectations concerning, amongst other things, our results of
operations, financial condition, liquidity, prospects, growth,
strategies and the economic and business circumstances occurring
from time to time in the countries and markets in which the Group
operates.
These statements are often, but not always, made through the use
of words or phrases such as "believe," "anticipate," "could,"
"may," "would," "should," "intend," "plan," "potential," "predict,"
"will," "expect," "estimate," "project," "positioned," "strategy,"
"outlook", "target" and similar expressions.
It is believed that the expectations reflected in this
announcement are reasonable but they may be affected by a wide
range of variables that could cause actual results to differ
materially from those currently anticipated.
Among the key factors that could cause actual results to differ
materially from those projected in the forward-looking statements
are uncertainties related to the following: the impact of
competition from illicit trade; the impact of adverse domestic or
international legislation and regulation; changes in domestic or
international tax laws and rates; adverse litigation and dispute
outcomes and the effect of such outcomes on the Group's financial
condition; changes or differences in domestic or international
economic or political conditions; adverse decisions by domestic or
international regulatory bodies; the impact of market size
reduction and consumer down-trading; translational and
transactional foreign exchange rate exposure; the impact of serious
injury, illness or death in the workplace; the ability to maintain
credit ratings and to fund the business under the current capital
structure; the inability to lead the development and roll-out of
BAT innovations (NGP and Combustible); and changes in the market
position, businesses, financial condition, results of operations or
prospects of the Group.
Past performance is no guide to future performance and persons
needing advice should consult an independent financial adviser. The
forward-looking statements reflect knowledge and information
available at the date of preparation of this announcement and BAT
undertakes no obligation to update or revise these forward-looking
statements, whether as a result of new information, future events
or otherwise. Readers are cautioned not to place undue reliance on
such forward-looking statements.
No statement in this communication is intended to be a profit
forecast and no statement in this communication should be
interpreted to mean that earnings per share of BAT for the current
or future financial years would necessarily match or exceed the
historical published earnings per share of BAT.
Additional information concerning these and other factors can be
found in the Company's filings with the U.S. Securities and
Exchange Commission ("SEC"), including the Annual Report on Form
20-F filed on 15 March 2018 and Current Reports on Form 6-K, which
may be obtained free of charge at the SEC's website,
http://www.sec.gov, and the Company's Annual Reports, which may be
obtained free of charge from the British American Tobacco website
www.bat.com.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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