First-Half Revenue and Profit Projected to Decrease, Reports British American Tobacco

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British American Tobacco Anticipates Slight Revenue and Profit Dip For Half-Year

British American Tobacco (BAT) revealed on Tuesday that it expects a minor drop in its half-year revenue and adjusted profit from operations, although the company remains optimistic about a low single-digit annual growth.

Challenges in the United States

BAT, the cigarette manufacturer behind notable brands like Dunhill and Lucky Strike, is facing hurdles in achieving the desired profit and revenue growth due to challenging conditions in the United States, one of its primary markets.

Impact on Traditional Tobacco Business and New Products

In the U.S., BAT’s traditional tobacco business and its assortment of recent products, including vapes, are grappling with issues. The company is facing a decrease in popularity as consumers opt for illegal disposable vapes or less expensive cigarettes over its costlier brands.

Signs of Recovery Amid Falling Traditional Cigarette Volumes

Despite the circumstances, BAT reports early signs of recovery in the U.S market. However, it also mentions a plunge of about 9% in traditional cigarette volumes in the industry this year.

Investment Set to Boost BAT’s Future

Tadeu Marroco, BAT’s Chief Executive, firmly believes that the company’s investments in its U.S. unit and other areas are solidifying its future.

“We foresee a stronger second half of the year, thanks to the investments we’re making today,” Marroco stated.

Hindered Performance and Full Year Guidance

BAT had previously cautioned that its performance would be biased towards the year’s second half, and that the U.S. market and ongoing investments might temporarily affect its results adversely.

Still, the company predicts a low single-digit decline in its half-year revenue and adjusted profit from operations. Yet, it asserts that it’s on course to meet its guidance for the entire fiscal year.

Revenue Growth Goal by 2026

The tobacco giant’s long-term plan aims to return to a 3-5% revenue growth by the year 2026.

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