BAT Reports 61.4% Boost in Operating Profits

British American Tobacco (BAT) released its half-yearly financial results, reporting a 4.4% increase in revenue and a notable 61.4% boost in operating profits for the six months ending June 30, 2023.

Strong revenue growth was seen in BAT's vapor electronic cigarette brand, Vuse, and oral tobacco Velo, while the introduction of the heat-not-burn product glo Hyper X2 Air laid the foundation for future innovations. Non-combustible products accounted for 16.6% of BAT's total revenue. The improved financial performance of new tobacco products contributed to a profit increase of £201 million ($278 million), with the company planning to reach profitability in this business segment by 2024.

The company stated that its investment in non-combustible products is starting to pay off, with a break-even point in sight and a 1.5 million increase in the number of users compared to the previous year. However, the report notes that further effort is needed to advance heat-not-burn tobacco products.

BAT's CEO, Tadeu Marroco, expressed satisfaction with the company's resilient performance and renewed vigor within the organization despite a complex external environment. He highlighted the growing role of new tobacco products in performance, with a year-on-year revenue growth of 29% and an increase of 1.5 million users of non-combustible products. Marroco remains confident about their future contributions and expects positive growth by 2024.

Addressing challenges, BAT stated it is enhancing strategic capabilities through management restructuring and further solidifying a culture of collaboration and inclusivity. The company will continue its commitment to sustainability, driving full value chain collaboration to achieve sustainable goals, including those related to emissions and biodiversity.

Previously, BAT's shareholders had expressed disappointment with the company's slow transition towards e-cigarettes and other less harmful products.