BAT supports forecast, but US growth is slow.

BAT Maintains Annual Forecasts Despite Weaker Cigarette Demand in the US

By Eva Mathews

“Our performance in U.S. combustibles has been disappointing,” newly appointed Chief Executive Tadeu Marroco said in a statement.

British American Tobacco (BAT) has announced that it will maintain its annual revenue and profit forecasts, despite weaker cigarette demand in the United States. The company has stated that its performance will be weighted towards the second half of the year, as it grapples with the decline in demand. BAT has also ramped up investments in e-cigarettes and so-called heat-not-burn devices as consumers switch to tobacco-free products. However, government efforts to regulate these alternatives, along with the threat of illicit sales, remain an overhang.

Global Tobacco Industry Volume Expected to Fall

BAT said the number of consumers of non-combustible products grew by 900,000 globally in the first quarter, but growth in the U.S. cigarette market had waned as price-sensitive consumers switched to cheaper brands. The Lucky Strike cigarette maker said global tobacco industry volume was now expected to fall around 3% in 2023, compared to an earlier forecast of a 2% decline. U.S. peers Altria and Philip Morris also missed quarterly sales expectations as demand for cigarettes fell.

California Ban on Flavoured Tobacco Products

London-listed BAT was also dealt a blow by a voter-approved ban on flavoured tobacco products in California, America’s most-populous state, although it said sales of its flavoured products in surrounding states had risen.

Organic Revenue and Adjusted Earnings Per Share Growth

The Dunhill cigarette maker continues to expect a 3% to 5% rise in 2023 organic revenue at constant currency rates and mid-single digit growth in adjusted earnings per share.

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