British American Tobacco Announces Impairment and Growth Expectations
British American Tobacco (BAT) has revealed that it predicts a one-off impairment of approximately £25 billion ($31.49 billion) in 2023, but the company remains confident in its full-year guidance. The FTSE 100 tobacco manufacturer, known for brands such as Kent, Dunhill, and Lucky Strike, expects revenue growth in 2023 to be at the lower end of its previously projected range of 3% to 5% on a constant currency basis.
BAT has reported strong volume and revenue growth in new product categories, which it foresees will reach a breakeven point. However, the company attributes a decline in performance in combustibles due to macroeconomic pressures in the United States. As a result, along with investment in its noncombustibles business, BAT plans to record a noncash impairment charge of approximately £25 billion.
The adjustment primarily pertains to some of BAT's U.S. combustibles brands. To correctly assess their carrying value and useful economic lives, BAT will evaluate them over an estimated period of 30 years.
BAT is committed to driving noncombustibles revenue to account for 50% of its total revenue by 2035. In line with this objective, the company will increase its investment throughout 2024 to expedite its transformation.
Looking ahead, BAT anticipates a gradual improvement, targeting revenue growth of 3% to 5% and mid-single digit adjusted profit from operations growth by 2026, based on organic growth rates at constant currency.
All Rights Reserved © 2024
Post a comment