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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  British American Tobacco Plc    BATS   GB0002875804

BRITISH AMERICAN TOBACCO PLC

(BATS)
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British American Tobacco : BAT remains confident of growth despite regulatory risk

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02/28/2019 | 04:52am EDT
FILE PHOTO:  People walk past the British American Tobacco offices in London

LONDON (Reuters) - British American Tobacco acknowledged concerns about the threat of tighter regulation in the United States but said on Thursday it was confident it could still grow its business.

The changes, which could include a ban on menthol cigarettes it sells under the leading Newport brand, have contributed to its share price losing around half its value since May 2017.

"We recognise that the proposed potential regulatory changes in the US have created some investor uncertainty," said Chief Executive Nicandro Durante, who will step down in April.

"We have a long experience of managing regulatory developments, a track record of delivering strong growth while investing for the future and an established multi-category approach."

BAT, the second-biggest international tobacco company, reported higher full-year adjusted sales and profit helped by cigarette market share gains and growth in vaping devices.

The maker of Lucky Strike and Dunhill cigarettes forecast continued earnings growth this year.

It also set a medium-term target for revenue from "new category" products, including e-cigarettes, tobacco heating devices and "modern oral" snus, to grow five-fold to £5 billion by 2023/2024.

Durante - who will be succeeded by Jack Bowles, chief operating officer of BAT's international business - forecast "another year of high single figure adjusted constant currency earnings growth" for 2019 and noted a board proposal to lift its dividend by 4 percent.

The company did not give a forecast for "new category" products for 2019.

Its shares fell 2.8 percent on Thursday, trading at 2715 pence by 0914 GMT.

Analysts at Hargreaves Lansdown noted that BAT faces a Canadian appeal court judgment on a smokers' class action damages suit, expected on Friday and which could saddle it with billions of pounds in compensation obligations.

"With debts still high ... the market will be waiting nervously on this judgment," they said.

For 2018, excluding the impact of currency fluctuations and the 2017 acquisition of Reynolds American, BAT reported adjusted revenue of £25.76 billion, up 3.5 percent. On a reported basis, revenue was £24.49 billion).

Its adjusted earnings per share were 296.7 pence, up 11.8 percent on the same basis. Roughly 3 percentage points of the earnings growth was related to a U.S. tax change.

Analysts on average had estimated revenue of £24.34 billion and earnings per share of 290.55 pence, according to Refinitiv data.

The company also said its finance director, Ben Stevens, planned to step down. He will be replaced on Aug. 5 by Tadeu Marroco, the company's director of group transformation.

(Reporting by Martinne Geller; Editing by Mark Potter/Keith Weir)

By Martinne Geller

Stocks mentioned in the article
ChangeLast1st jan.
BRITISH AMERICAN TOBACCO PLC -1.10% 2885.5 Delayed Quote.15.42%
VALUE8 1.82% 5.6 Delayed Quote.18.14%
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Financials (GBP)
Sales 2019 25 159 M
EBIT 2019 10 855 M
Net income 2019 7 050 M
Debt 2019 42 132 M
Yield 2019 6,95%
P/E ratio 2019 9,93
P/E ratio 2020 9,22
EV / Sales 2019 4,42x
EV / Sales 2020 4,18x
Capitalization 69 135 M
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Technical analysis trends BRITISH AMERICAN TOBACCO P
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Mean consensus OUTPERFORM
Number of Analysts 21
Average target price 34,4  GBP
Spread / Average Target 14%
EPS Revisions
Managers
NameTitle
Nicandro Durante Chief Executive Officer & Executive Director
Jack Marie Henry David Bowles Chief Executive Officer-Designate & Director
Richard George William Burrows Chairman
Alan Davy Director-Group Operations
John Benedict Stevens Executive Director & Finance Director
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