- British American Tobacco reported a £15.8bn loss from operations in 2023
- BAT took a £27.3bn writedown on the value of some of its combustible brands
British American Tobacco plunged to a £17,1billion pre-tax loss last year after recording a higher-than-expected impairment charge on its US business.
The Dunhill and Lucky Strike cigarettes manufacturer reported a £15.8billion loss from operations in 2023, compared to a £10.5billion profit the previous year.
Two months ago, the group warned it was guiding for a £25billion writedown on the value of some of its American combustible brands amid declining smoking rates and widespread economic pressures.
Offloading: British American Tobacco said it expects to complete the sale of its Russian business to its local partner this year
But in annual results published on Thursday, BAT revealed it took a £27.3billion hit from the brands, with the increase blamed on foreign exchange movements.
Currency headwinds and weaker cigarette volumes also contributed to the FTSE 100 company’s overall revenue falling by 1.3 per cent to £27.3billion last year.
But turnover was mainly impacted by the offloading of BAT’s Russian and Belarus businesses last summer to a consortium run by its Russian management team.
However, organic sales grew by 3.1 per cent at constant currency rates thanks to solid performances by the firm’s ‘new categories’ unit.
Revenue from vaping product Vuse jumped by more than a quarter despite the high prevalence of illicit single-use products across the US.
Meanwhile, sales of Velo nicotine pouches climbed by 39 per cent thanks to a 3.3 million increase in users and rising average daily consumption in established and expanding markets.
The surge in non-combustible purchases, which now provide around one-sixth of BAT’s total revenue, helped the group achieve a profit from its new categories portfolio two years ahead of its planned target.
Tadeu Marroco, chief executive of BAT, said: ‘2023 was another year of resilient financial performance and delivery in line with our guidance, underpinned by our global footprint and multi-category strategy, despite a challenging macro-environment.’
Marroco succeeded Jack Bowles as CEO last May, having spent over three decades at the business, including four years as finance boss and a spell as regional director for Europe and North Africa.
For the current year, BAT anticipates ‘low single-figure’ organic growth in sales and adjusted profit from operations, with the result weighted towards the second half of the period.
British American Tobacco shares were 6.9 per cent higher at 2,478.5p on Thursday morning, although they have fallen by around a fifth over the past 12 months.
Neil Shah, executive director of content and strategy at Edison Group, said: ‘With the sector continuing to face increasingly regulatory and political headwinds, investors are likely to be questioning their commitment to the stock given BAT’s recent share price underperformance.’