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British American Tobacco (BAT) reported full-year sales growth of between 2% and 4% after an increase in consumer use of its e-cigarette range.
The cigarette maker also stated that it expected “strong adjusted operating margin improvement despite increasing inflation in our supply chain.”
However, the net finance costs for the maker of Lucky Strike cigarettes are expected to be above £1.6bn, driven by rising interest rates and the strength of the US dollar.
Before markets opened in London shares in British American Tobacco (BATS.L) were down 66p to 3,344p, a 1.94% drop in the day.
The company gave the below highlights in today’s trading report.
FY 2022 guidance:
- Revenue growth of 2% to 4% at constant currency rates
- Mid-single figure adjusted diluted EPS growth at constant currency, including a transactional FX headwind of c.2%
- FY global tobacco industry volume expected to be c. -2% (prev. c.-3%), driven by continued post COVID recovery in emerging markets
- Net finance costs above £1.6bn, driven by rising interest rates and USD strength
- Translation FX tailwind of c.7%2 on adjusted diluted EPS growth for FY 2022
- FY operating cash conversion in excess of 90% of adjusted profit from operations
- We expect leverage for the full year at the high end of our corridor of 2-3x adjusted net debt3/ adjusted EBITDA4, applying current exchange rates2 until year end.
Trading update detail:
Vuse extending global leadership position5 in Vapour
- Vuse global value share up 2.2 ppts Sept YTD vs. FY 2021, reaching 35.7% in key Vapour markets6
- Vuse extends No.1 national leadership position in the US7, with leadership in 35 states and total Vapour value share of 39.3%, up 6.8 ppts Sept YTD vs. FY 2021
- Continued strong incremental category growth internationally, driven by disposables segment
- Recently launched Vuse Go has achieved No.2 value share in the UK and France
- Rapid geographic rollout of Vuse Go, now launched in 12 markets
