Daily Management Review

Shift To E-Cigarettes Prompts BAT To Raise Sales Growth Outlook


Shift To E-Cigarettes Prompts BAT To Raise Sales Growth Outlook
With good results being witness from its efforts to focus on e-cigarettes and tobacco-heating devices, the its annual revenue growth forecast for the current year was raised by British American Tobacco (BAT) on Tuesday. That pushed the stocks of the company up by 2 per cent.
A revenue growth of more than 5 per cent at constant currencies was expected by it, said the London-listed company, which was over the previous forecast range of 3 per cent to 5 per cent for the year to December that was issued by the company. It retained its growth expectation for adjusted earnings per share in the mid-single digit range.
Market share in all key markets, including the United States and Japan, has been gained by its "new category" reduced risk products, said the maker of Lucky Strike and Newport cigarettes, and added that it had added about 1.4 million new customers during the first quarter.
The total number of users of its new category products was now at 14.9 million, said the company which also sells Vuse e-cigarettes and glo tobacco heating products.
"The upgrade and delivery around reduced risk products is particularly encouraging", Jefferies analyst Owen Bennett wrote.
According to the statement made by BAT, there are clear indications that more customers in the United States are switching to e-cigarettes prior to a potential ban likely to be imposed on menthol cigarettes and flavoured cigars.
The sales volumes for the full year will likely show a better performance than the broader industry as expected by it, said BAT. The broader industry is expected see a drop in sale of about 3 per cent for the current year. A recovery in markets such as Bangladesh, Pakistan and Vietnam is expected to help the company to boost sales this year, BAT said.
While pining the blame on "macro-economic and fiscal" uncertainties, BAT said that the outlook for the US industry volumes was still unclear for the year.
There were strong growth in demand for its oral nicotine products in Sweden and Norway, the company also said, as the company said it now control about 50 per cent share in both markets ion terms of volume of sale.
"We continue to expect 2021 to be a pivotal year for the business, with accelerating new category revenue growth (and) a clear pathway to new category profitability," BAT Chief Executive Jack Bowles said in a statement.
Investments of almost 500 million pounds ($707 million) in its new category products business were made by the company last year and bat has set itself a target of achieving 5 billion in sales for the business by 2025 and 50 million customers by 2030.