BRITISH American Tobacco on Friday delivered strong financial results, boosted by the continuously increasing sales of e-cigarettes and oral nicotine.
The producer of Dunhill, Camel and Lucky Strike reported a 7 percent increase in full-year adjusted revenue to £25.7 billion (R531 billion) when it released its preliminary results for the year ended December 31, 2021.
BAT reported a £2 billion share buyback programme for 2022. It also announced a small dividend increase of just 1 percent to 217.8 pence.
Total sales were £25.7 billion, down 0.4 percent, with pre-tax profits up from £8.6 billion to £9.2 billion in the year.
While the company’s cigarettes remained its biggest sellers, up £22 billion last year, but 3.2 percent lower on last year, BAT chief executive Jack Bowles said last year the business had delivered on its transformation journey.
“We accelerated new category revenue, with growth of over 50 percent, and reached a total of 18.3 million consumers, from 13.5 million up 4.8 million, of our non-combustible products. New category losses reduced for the first time, contributing to earnings growth,” he said.
The growth in consumers of non-combustible products was the company’s strongest to date. Non-combustible products now account for 12 percent of group revenues, up from 4 percent in 2017.
In 2019, the leading tobacco company revealed it was creating three global brands for its new category product portfolio. New categories included Vuse for vapour products, Velo for modern oral products, and Glo for tobacco heating products.
Bowles said the company was on a path to deliver £5 billion of revenue and profitability from new categories by 2025, and was developing opportunities beyond nicotine, leveraging its knowledge and capabilities from new categories.
Of note, vapour revenue rose by 59 percent, Glo revenue was up 46 percent, and Modern Oral revenue increased by 41 percent.
BAT expected global tobacco industry volumes to slip by roughly 2.5 percent this year.
Last year, BAT bought a 20 percent stake in a Canadian company, Organigram, which produces marijuana for medical and recreational use.
BAT said it was also committed to the environmental, social, and governance targets it had set.
“These include becoming carbon-neutral across our operations, scope 1 and 2 emissions by 2030, and net-zero across our value chain by 2050,” BAT said.
BAT said its outlook for 2022 included that it expected global tobacco industry volumes to decrease by about 2.5 percent in 2022, constant currency revenue growth of 3-5 percent, strong new category revenue growth and a further reduction in losses, and high single-figure constant currency adjusted earnings per share growth, with growth second-half weighted. Transnational foreign exchange is expected to be broadly neutral on full-year adjusted EPS growth and operating cash-flow conversion in excess of 90 percent.
On Friday, BAT also announced board changes. It said Krishnan “Kandy” Anand would join the board as an independent non-executive director and member of the nominations and remuneration committees with effect from today.
Kandy is the chief executive of Igniting Business Growth.
BAT also announced that Marion Helmes would step down from the board with effect from the conclusion of the annual general meeting on April 28 and not stand for re-election.
Its share price on Friday closed 1.59 percent higher at R687.
BUSINESS REPORT ONLINE