Russia Exit Hits BAT Profits

Industry Insight
Jul.28.2022

BAT took a £957 million ($1.15 billion) impairment charge related to the transfer of its Russian business, lowering its half-year earnings by a quarter.

Russia Exit Hits BAT Profits

The London-based firm, which controlled almost a fourth of the Russian market, said earlier this year that it was in advanced talks with its distributor in the country to sell the business in the wake of Russia’s invasion of Ukraine.

 

BAT reported a 25 percent drop in profit from operations on a reported basis to £3.68 billion for the six months to June 30 as a result of the charge. The company expects global tobacco industry volume to be down about 3 percent, partly because of the Russia-Ukraine crisis.

 

In a press release announcing the half-year results, BAT emphasized the growth of its New Categories products and the performance of its combustible business, which continues to grow value share enabled by robust pricing.

 

“I am very proud that our continued New Categories growth momentum is driving faster transformation, with revenue growth of 45 percent in the first half of 2022, on top of 51 percent growth in fiscal year 2021,” said BAT CEO Jack Bowles. “I am especially proud that the number of consumers using our noncombustible brands has passed the milestone of 20 million in the first half.”

 

Noncombustible products now represent 14.6 percent of BAT’s revenue.

 

While acknowledging the geopolitical and macroeconomic challenges, Bowles was upbeat about the outlook for BAT.

 

“We are not immune, of course, to the increasing macroeconomic pressures, exacerbated by the conflict in Ukraine,” he said. “However, we are well positioned to navigate the current turbulent environment due to our powerful brands, operational agility and continued strong cash generation.”

 

The content excerpted or reproduced in this article comes from a third-party, and the copyright belongs to the original media and author. If any infringement is found, please contact us to delete it. Any entity or individual wishing to forward the information, please contact the author and refrain from forwarding directly from here.

2Firsts Hosts U.S. Compliance Briefing on Building PMTA Support Capabilities Across the Nicotine Supply Chain
2Firsts Hosts U.S. Compliance Briefing on Building PMTA Support Capabilities Across the Nicotine Supply Chain
2Firsts held a U.S. compliance briefing in Shenzhen to help vaping, heated tobacco and nicotine pouch supply chain companies strengthen PMTA support capabilities. The event focused on supplier documentation, quality systems, traceability, TPMF/TPMP pathways, age verification and customer audit readiness as U.S. compliance expectations increasingly extend deeper into the nicotine supply chain.
Events
Jun.12
UK Proposes Stricter Vape Packaging Rules as Retailers Warn of £330 Million Impact
UK Proposes Stricter Vape Packaging Rules as Retailers Warn of £330 Million Impact
The UK government has launched a nationwide consultation on vape packaging, appearance and retail displays, proposing tighter rules to reduce youth appeal while industry groups warn of significant compliance costs.
Innovation
Jul.20
South Korea Rejects 16 Trillion Won Tax-Evasion Claim Over Chinese Synthetic Nicotine
South Korea Rejects 16 Trillion Won Tax-Evasion Claim Over Chinese Synthetic Nicotine
The South Korean government rejected allegations that Chinese synthetic-nicotine e-liquids were linked to about 16 trillion won in tobacco tax evasion, saying China does not ban synthetic nicotine exports and the estimate is difficult to verify, while acknowledging that pre-law synthetic-nicotine inventory is effectively difficult to tax.
Market
Jun.25
Japan Health Ministry Cites Limited Evidence in Decision Not to Tighten Heated Tobacco Rules
Japan Health Ministry Cites Limited Evidence in Decision Not to Tighten Heated Tobacco Rules
Japan’s health ministry has proposed not tightening regulations on heated tobacco products to the same level as cigarettes as part of a review of passive smoking measures, with an expert panel broadly agreeing with the proposal, Jiji Press reported.
Jul.10
South Korea Brings Synthetic-Nicotine E-Cigarettes Under Tobacco Rules From June 24, Targeting Online Sales and Evasion
South Korea Brings Synthetic-Nicotine E-Cigarettes Under Tobacco Rules From June 24, Targeting Online Sales and Evasion
South Korea began full enforcement of tobacco-style rules for synthetic-nicotine e-cigarettes on June 24, 2026, with fines of up to 100,000 won for use in non-smoking areas and enforcement focus on online sales, raw nicotine liquids and products falsely marketed as nicotine-free.
MarketNews
Jun.25 by 2Firsts Perspectives
UK HMRC Plans 30,000 Retail Enforcement Actions as Illegal Tobacco and Vape Sellers Face Tougher Crackdown
UK HMRC Plans 30,000 Retail Enforcement Actions as Illegal Tobacco and Vape Sellers Face Tougher Crackdown
The UK government has announced that HM Revenue & Customs (HMRC) will carry out more than 30,000 interventions targeting businesses and retail premises during the 2026-2027 financial year. The actions will focus on tax fraud, illegal goods sales and businesses involved in unlawful activities through retail channels. The government said illegal tobacco and illegal vape sales remain areas of concern. The move shows that UK enforcement against illegal nicotine products is expanding from import and supply channels toward retail-level oversight, alongside the upcoming introduction of the Vaping Products Duty.
Jul.24