British American Tobacco are fighting off falling combustible volumes by taking big strides forward in their new categories units which includes vapes and other no-tobacco products.
The FTSE 100 stalwart said revenues for FY 2022 would increase 2% to 4% on a constant currency basis, despite the global tobacco industry contracting 2%.
The increase in revenue pays testament to the ‘A Better Tomorrow TM‘ transformation strategy that has positioned the company for increased use of less harmful nicotine products.
Analysts have highlighted British American Tobacco’s ‘resilience’ as the company enjoys a dominant market share in new categories with their brands including Velo, Vuse and glo.
“British American Tobacco is again proving its resilience, with strong pricing and a pivot to new products driving revenue growth, even as cigarette volumes fall,” said Derren Nathan, Head of Equity Research at Hargreaves Lansdown.
“It’s also managing to eek out underlying profit growth. Outside of the United States volumes are holding up, but across the pond a prolonged period of inflation is starting to impact consumer behaviour, with early signs of accelerated downtrading in the industry in the second half of the year.
“BATS will be upping its marketing efforts here but it’s too early to say if it can slow this trend. But BATS is well spread across global markets and remains highly cash generative, all of which is supportive of a forward dividend yield of over 7%”.