British America Tobacco shares were flat at 3,566p in early morning trading on Thursday, after the group announced strong revenue and volume growth across all three of its new categories.
The company’s Vuse, Velo and Glo brands are reportedly on track to deliver the firm’s £5 billion in new category revenue and profitability targets by 2025, with the group working to narrow losses in the categories for the current term.
British American Tobacco said its combustible business was maintaining its value, with an anticipated £1.5 billion in savings from its Quantum business simplification programme.
The tobacco giant confirmed that it would be returning £2 billion to shareholders through its 2022 share buyback scheme, alongside the increase of its dividend payouts.
The group also commented that it was in the process of transitioning its Russia-based business assets to align with legal requirements according to international and local law.
It warned that cost inflation was impacting its supply chain, however the company added that it remained confident in its FY 2022 guidance of 2% to 4% revenue growth at constant currency along with mid-to-single figure adjusted diluted EPS growth.
The firm noted in applying current foreign exchange rates, it would expect a translation tailwind of 2% on adjusted diluted EPS growth for HY1 2022 and 5% for FY 2022, and further mentioned a FY 2022 operating cash conversion in excess of 90% of adjusted profit from operations.
British American Tobacco highlighted a projected growth in its non-combustible product consumer base, which hit 19.4 million in Q1 2022, alongside scaled-up new category investment, with over £1 billion invested in the first half.
The company did highlight that its FY global tobacco industry volume was estimated to be minus 3% as a result of the geopolitical turmoil related to the Russian conflict against Ukraine.
“While we recognise that there will be challenges ahead and that there is more work to do, our execution capabilities continue to evolve, and we are rapidly transforming the business. We are now in our Faster Transformation phase and making strong progress,” said British American Tobacco CEO Jack Bowles.
“I am proud of the continued commitment and delivery of our teams and partners across the world as we work towards building A Better Tomorrow.”
