BAT Releases 2024 Fiscal Year Trading Update on December 11th

On December 11, British American Tobacco (BAT) released a trading update for the fiscal year ending 2024. The company stated that the accelerated growth in the second half of 2024 was in line with expectations, primarily driven by innovation in new product categories. Revenue from new product categories and traditional tobacco is expected to increase in the second half of the year compared to the first half.

BAT expects that by the end of 2024, the cash conversion rate will exceed 90%, while the leverage ratio will be within the target range of 2.0-2.5 times. Additionally, they have expressed support for the Canadian Companies' Creditors Arrangement Act (CCAA) and are hopeful to reach a conclusion that is beneficial for all stakeholders.

In the traditional tobacco industry, the United States' business actions continued to gain momentum in the second half of the year; in the AME and APMEA regions, its market share continued to grow. Investments in the first half of the year in the US business actions and wholesale inventory adjustments drove an increase in organic sales volume and financial performance in the traditional tobacco business in the second half of the year. Despite a slight decrease in value share due to the impact of the US market's geographic mix, volume share increased by 20 basis points in key markets.

The performance of new business categories is also improving. Vuse e-cigarettes maintain a leading market share globally, with a 40.3% share in key markets (50.7% share in tracked channels in the U.S.). Meanwhile, the innovative product line of the glo brand is showing signs of accelerated growth in the second half of the year, with new products like glo Hyper Pro driving sales growth. The Velo brand continues to experience strong growth in markets outside the U.S., solidifying its position as a leader in the oral market.

BAT expects a decrease in sales of approximately 2% in 2024, with organic revenue and profit growth forecasted to be in the low single digits. Planned capital expenditure is around 600 million pounds, and net financial expenses are expected to be 1.6 billion pounds, impacted by fluctuations in exchange rates and interest rates.