British American Tobacco (BATS)

Sector:

Tobacco

Index:

FTSE 100

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2,804.02p
   
  • Change Today:
    -55.49p
  • 52 Week High: 4,222.50
  • 52 Week Low: 2,375.00
  • Currency: UK Pounds
  • Shares Issued: 2,293.79m
  • Volume: 745,089
  • Market Cap: £64,318m
  • RiskGrade: 135
  • Beta: 0.02

Classic cigarettes remain core to British American Tobacco earnings growth in 2019

By Josh White

Date: Thursday 25 Apr 2019

LONDON (ShareCast) - (Sharecast News) - British American Tobacco described itself as being in "good shape" on Thursday, as investors gathered for its annual general meeting, explaining that its focus on a multicategory approach was enabling the company to delivery shareholder returns, and invest in its future.
The FTSE 100 tobacco giant said that, while its business was continuing to perform "very well", it was "very conscious" that investor sentiment over the last 12 months had been negatively impacted by concerns over possible regulation in the US, and competitor dynamics in new categories, resulting in a sharp fall in its share price.

It was referring to reports late in 2018 that the United States Food and Drug Administration was looking to press ahead with its ban on menthol in combustible tobacco, as well as movements among its Big Tobacco peers in the popular non-combustible space, which includes electronic cigarettes, or 'vaping'.

"I am, however, confident that the business is in good shape and that the causes of these concerns in fact present significant opportunities for future growth," said chairman Richard Burrows in his address to investors.

"Our core combustible business continues to outperform the industry; we have established a successful and fast growing potentially reduced risk product business, and our US acquisition - which has a long track record of managing regulatory change - is now fully integrated.

"Against a backdrop of a strong set of results and consequently rising share price, all of this, I believe, puts us is a strong position to deliver long-term sustainable growth, reflected in our continued annual dividend increases, this year's of 4%."

With respect to potentially reduced-risk products - or 'PRRPs', as BAT refers to them - the company said the last year had seen a near-doubling of its revenues in vapour and tobacco heating products alone.

Its vapour revenues increased by 26%, while its tobacco heating products grew revenue by over 180%.

Tobacco heating products bridge the gap between combustible tobacco, heating tobacco leaf to product a nicotine vapour without burning the leaf, with BAT's 'glo' range primarily competing with the 'IQOS' brand of Philip Morris International.

Tobacco companies claim such products have a similarly reduced risk as electronic cigarettes, which use nicotine liquid to produce an aerosol vapour, although health experts and regulators have disputed this.

"These are early stages in our PRRP journey, and as technology and innovation increasingly play a role in our business, our product pipeline will continue to expand," Burrows said.

"In 2018 we filed 130 patents and expect that number to nearly double this year."

The result was "better and more innovative" products appearing in markets around the world, according to BAT.

In 2018, the company launched new products in more than 12 countries, including its 'Vype ePen3' electronic cigarette, which won vapour category product of the year in the UK's largest consumer survey, as well as the successful launch of its 'Vuse Alto' product in the US.

In the combustible category, BAT's overall market share increased 40 basis points, which Burrows said was powered by the "strong performance" of its strategic portfolio, which grew volume by 4.8%.

"Our combustible products continue to make up the bulk of our revenues and profit.

"This will remain the case for many years to come, and these profits will drive sustainable returns and dividends for our shareholders as we make the investment required to grow our PRRP business.

"Looking forward to 2019 we can expect another year of good earnings growth."

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Note 1: Prices and trades are provided by Digital Look Corporate Solutions and are delayed by at least 15 minutes.

Note 2: RiskGrade figures are provided by RiskMetrics.

 

BATS Market Data

Currency UK Pounds
Share Price 2,804.02p
Change Today -55.49p
% Change -1.94 %
52 Week High 4,222.50
52 Week Low 2,375.00
Volume 745,089
Shares Issued 2,293.79m
Market Cap £64,318m
Beta 0.02
RiskGrade 135

BATS Star Ratings

Compare performance with the sector and the market.
more star ratings
Key: vs Market vs Sector
Value
66.10% above the market average66.10% above the market average66.10% above the market average66.10% above the market average66.10% above the market average
100% below the sector average100% below the sector average100% below the sector average100% below the sector average100% below the sector average
Price Trend
36.53% below the market average36.53% below the market average36.53% below the market average36.53% below the market average36.53% below the market average
100.00% above the sector average100.00% above the sector average100.00% above the sector average100.00% above the sector average100.00% above the sector average
Income
88.05% above the market average88.05% above the market average88.05% above the market average88.05% above the market average88.05% above the market average
100% below the sector average100% below the sector average100% below the sector average100% below the sector average100% below the sector average
Growth
53.28% above the market average53.28% above the market average53.28% above the market average53.28% above the market average53.28% above the market average
100.00% above the sector average100.00% above the sector average100.00% above the sector average100.00% above the sector average100.00% above the sector average

What The Brokers Say

Strong Buy 14
Buy 1
Neutral 3
Sell 1
Strong Sell 0
Total 19
buy
Broker recommendations should not be taken as investment advice, and are provided by the authorised brokers listed on this page.

BATS Dividends

  Latest Previous
  Q4 Q3
Ex-Div 24-Dec-19 03-Oct-19
Paid 06-Feb-20 14-Nov-19
Amount 50.75p 50.75p

Trades for 19-Jun-2019

Time Volume / Share Price
10:35 719 @ 2,804.02p
10:35 83 @ 2,804.00p
10:35 130 @ 2,804.00p
10:35 200 @ 2,804.00p
10:35 150 @ 2,804.00p

BATS Key Personnel

CEO Nicandro Durante
Finance Director Ben Stevens
Chair Richard Burrows
CEO Jack Bowles

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