British American Tobacco (BAT) released its financial results for the first half of 2022, ending on June 30. Despite reporting higher-than-expected revenues of £12.87 billion, the company's operating profits dropped by 25% due to the divestment of its Russian business, resulting in an impairment charge of £957 million ($1.15 billion). This has led to a narrower loss compared to the previous period, but BAT still remains in the red.
Before changes in Russia’s business landscape, British American Tobacco held almost a quarter of the country’s tobacco market. However, in June of this year, the company negotiated with Russian distributors to sell and transfer the business. British American Tobacco has now initiated legal and regulatory procedures to enter the Russian market and its financial report states that the transfer “fully complies with international and local laws”.
Today, the official website of British American Tobacco announced changes to their board of directors. Véronique Laury will be joining the board as an independent non-executive director and a member of the nomination and audit committee, effective from September 19th, 2022. Sue Farr will be taking over from Dimitri Panayotopoulos as the senior independent director, effective from August 1st, 2022.
Here is the official financial report announcement from British American Tobacco.
The growth of new types of tobacco is rapidly pushing transformation.
The CEO of BAT, Jack Bowles, has expressed his pride in the company's sustained growth in new tobacco categories, which has prompted a faster transformation. In the first half of 2022, revenue increased by 45%, surpassing the 51% growth in the 2021 fiscal year. The company is delivering strong operational performance and business transformation.
I am particularly proud that during the first half of the year, the number of consumers using our non-flammable brand products has surpassed a milestone of 20 million users. Our goal for a better future is in line with our mature multi-category strategy, which continues to drive growth.
Our strong global portfolio of new tobacco brands supported our revenue performance, with non-combustible products now accounting for 14.6% of total revenue. Revenue growth exceeded volume growth in all three new categories. We are confident in achieving £5 billion in revenue and profitability for our new tobacco products by 2025.
Furthermore, revenue from innovative tobacco products in the first half of the year increased by over 50%, resulting in a decrease of £281 million in losses during this period. We are also continuing to invest in our transformation efforts, with a total investment of £1.1 billion in innovative tobacco products in the first half of the year.
Looking at it from an innovative perspective, the second half of the year also promises to be exciting. We are currently introducing a new glo system - hyper X2, as well as a new series in the THP category, and we are experiencing strong growth. Additionally, we are continuing to solidify our position as international leaders in aerosol products with the launch of our new disposable aerosol platform, Vuse Go, which expands our product range. Following a successful trial period in the UK in the first half of 2022, we will scale up and expand to new markets.
British American Tobacco's glo™ hyper X2, featuring 2FIRSTS, and British American Tobacco's VUSE GO, featuring 2FIRSTS.
Our competitive pricing has allowed us to continue growing our market share in the tobacco industry. Additionally, we have saved £1.5 billion six months ahead of schedule and our progress continues.
We have a strong and resilient investment portfolio in the United States, with increasing value and market share in combustible tobacco and vaping products. We are continuing to increase our market share in combustible tobacco and thus far, the decline in sales of our combustible tobacco products has not accelerated.
Of course, we are not immune to the increasing macroeconomic pressures aggravated by the conflict in Ukraine. However, due to our strong brand, operational agility and continued robust cash generation, we are fully capable of addressing the current turbulent environment.
I am pleased to report that with the hard work and commitment of BAT staff around the world, we are achieving operational performance and business transformation at a rapid pace in a challenging environment.
With a strong start this year, I am confident in achieving our annual goals. While there is still more work to be done, these results indicate that we are making significant progress in transitioning towards a better future at a faster pace.
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