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Highlights
- British American Tobacco’s business reported excellent growth in the second half, driven by a new category of products like an e-cigarette, oral nicotine, and tobacco heating.
- The company has stated that it is on track for excellent progress and aims to achieve £5 billion in revenue by 2025.
FTSE 100 listed tobacco and nicotine products maker, British American Tobacco Plc (LON: BATS), reported its business update for the second half of 2021. The company said it is rapidly transforming towards new categories of products and anticipates strong growth momentum in the current financial year.
Business update for the second half
The company’s business reported excellent growth driven by a new category of products like an e-cigarette, oral nicotine, and tobacco heating. The company added 3.6 million new customers in the non-combustible product segment bringing the total user base to 17.1 million as of September 2021. The rise in the user base of non-combustible products indicates more consumers are shifting towards a new category of products which will help the company achieve its ESG goal and sustainable business growth.
The company invested close to £346 million in the new categories of products in the first six months of 2021, resulting in the rise of sales number by 50% for the new product category. In addition, the new category business segment is expected to contribute to the overall group’s profit for the first time in 2021 as the losses from these segment starts to reduce.
The company’s e-cigarette brand Vuse is one of the leading brands in the US and has been consistently gaining market share in the top five markets. Vuse product gained a market share of 6.9% in the first nine months of 2021. In addition, its tobacco heating product (THP) brand Glo gained 4.5% in market share in the nine months to September 2021.
The company said it is on track for excellent progress and aims to achieve £5 billion in revenue by 2025. In a medium-term scenario, the company expects revenue growth of 5%, driven by a positive outlook towards the global tobacco industry. The company expects volumes in the tobacco industry to be flat in the current financial year (previous outlook: -1.5%).
British American Tobacco Plc and its share price performance
The UK-based company operates in the manufacturing of tobacco and nicotine products. It is one of the largest tobacco companies globally in terms of sales. The company has operations in over 180 countries and owns famous brands like Dunhill, Lucky Strike, Vype and Vuse. It distributes products through retail outlets.
The company’s stocks witnessed good buying interest from investors ahead of its trading update announcement. As a result, the share price has moved higher by over 6.2% since 1 December 2021. The stock currently trades at GBX 2,678 at 10:45 am GMT+1, with a market cap of £60,246 million. The company’s current dividend yield stands at 8.2% as of 7 December 2021.
