A man exhaling whilst using a vaping product (Nick Ansell/PA)
(Picture: PA Archive)British American Tobacco expects its vaping division to be profitable earlier than previously anticipated, but its share price was down as diluted earnings per share declined.
Total revenue for BAT is set to come to £27.7 billion for 2022, up 7.7% from 2021.
Its “new categories” arm - made up of vapes, tobacco heating products and pouches contributed £2.9 billion of this revenue, which was up by 40.9%.
CEO Jack Bowles said the division was now expected to turn a profit in 2024, one year earlier than previously thought.
“"Our new category business delivered strong volume, revenue and market share growth and has become a significant contributor to the group’s financial delivery,” he said. “In 2022, we invested more than £2 billion in new categories to drive long-term sustainable growth, while making excellent progress in reducing operating losses by 62%.”
Group operating profit also increased slightly, to £10.5 billion.
BAT said a number of one-off charges, including from divesting its Russian operations and the need to set aside money because of a US investigation into alleged historical breaches of sanctions, brought its profits down. Bowles added that it expected the deal to divest its Russian business to an unnamed “joint management-distributor consortium” to close this year.
Adjusted operating profit was in line with expectations at £12.4 billion.
However, BAT shares are down 4.5% so far today to 2,953p, as diluted earnings per share dipped by 1% to 291.9p.
The group also announced a dividend today of 230.9p per share, up by 6% from last year’s dividend. However, finance & transformation director Tadeu Marroco said BAT would “take a pragmatic approach” with capital allocation, and “prioritise strengthening the balance sheet”.
Last week, BAT announced a restructuring of its regional divisions which would include merging Europe with the non-US Americas. A spokesperson told the Standard at the time that the new plan could lead to layoffs, but that no decisions on the matter had been made yet.
