British American Tobacco annual profit beats estimates

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Lucky Strike maker British American Tobacco reported a stronger-than-expected annual profit on Wednesday, as it sold more higher priced cigarettes and saw more customers use its e-cigarette and tobacco heating during the COVID-19 pandemic.

Sales have proven to be resilient during the pandemic, despite warnings from the World Health Organization and the United States Centers for Disease Control and Prevention that have said that smoking makes it harder to fight off the coronavirus.

“We delivered on our targets in what was a very challenging year,” Chief Marketing Officer Kingsley Wheaton said. “For the first year new category losses will reduce and therefore new categories are going to contribute to our full year earnings growth.”

Adjusted earnings per share (EPS) rose 5.5% to 331.7 pence, beating analysts’ average estimate of 329.87 pence, according to Refinitiv data.

The world’s second-largest tobacco company also forecast constant currency revenue growth of 3% to 5% and mid-single-digit adjusted EPS growth for 2021. It expects global tobacco industry volumes to decline around 3% in 2021.

The company also increased its full-year dividend by 2.5% to 215.6 pence per share.

Full-year revenue fell 0.4% to 25.78 billion pounds ($35.79 billion), beating analysts’ average estimate of 25.66 billion pounds.

Revenue from its new categories business rose 15%, boosted by a 52% jump in vapour sales, which includes its Vuse and Vype brands.

Shares of the Dunhill and Rothmans maker fell about 17% last year, while the FTSE 100 has fallen around 9%.

Main Photo: Exterior view on the headquarters of British American Tobacco (BAT) in London, Britain. EPA/FACUNDO ARRIZABALAGA

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