Source: Sharecast
As BAT continues to reshift its focus away from traditional tobacco products, and combined with macroeconomic pressures impacting its US combustibles brands, chief executive Tadeu Marroco said the company will "take an accounting non-cash adjusting impairment charge of around £25bn [... which] mainly relates to some of our acquired US combustibles brands, as we now assess their carrying value and useful economic lives over an estimated period of 30 years".
BAT said it will commence amortisation of the remaining value of its US combustibles brands from January 2024.
The company expressed optimism about its long-term future as it ramps up aspirations to become a "predominantly smokeless business", and said it saw continued strong volume and revenue growth in its so-called New Category products, led by vape brand Vuse and tobacco-free nicotine brand Velo.
However, 2023 organic revenues are now expected to grow at the low end of the 3-5% guidance range at constant exchange rates. However, full-year earnings should be in line with guidance.
The company said it is now committing to "building a smokeless world", with 50% of revenue now expected to come from non-combustibles by 2035. As part of this commitment, BAT said it is planning investment to strengthen its US business, accelerating innovation momentum in the Heated Products category globally.
As a result of these investments, revenue and adjusted profit from operations are expected to grow by low-single digits on an organic basis at constant rates.
"We expect a progressive improvement to 3-5% revenue growth, and mid-single digit adjusted profit from operations growth on an organic basis at constant rates by 2026," Marroco said.
"With only 10% of the world’s 1 billion smokers currently using New Category products, the long-term opportunity for growth as we deliver on our transformation is vast," said Marroco.
"I am confident that the choices we are making today will drive our long-term success and deliver sustainable value for all of our stakeholders."