REG - British Amer.Tobacco - 2023 First Half Pre-Close Trading Update
06/06/2023 07:00
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RNS Number : 7164B British American Tobacco PLC 06 June 2023
2023 H1 Pre-Close Trading Update: On track to meet full year guidance
06 June 2023
Trading update - ahead of closed period commencing 26 June 2023
Tadeu Marroco, Chief Executive:
"I am delighted to provide this first trading update since becoming Chief
Executive.
Firstly, let me address a frequently asked question: Will there be a change in
our strategy? No. I am clear that the strategy we created in 2019 is right. I
am confident that we can execute it successfully.
Our commitment to building A Better Tomorrow(TM), by reducing the health
impact of our business through a multi-category portfolio of reduced-risk
products*(†) remains. Put simply, smokers must have access to better
choices. This is already a reality for smokers who have made the switch to our
reduced-risk products*(†). It also represents a commitment to our consumers
who continue to smoke and are yet to make that transition.
I often hear A Better Tomorrow(TM) being referred to as our strategy, when in
fact it is our purpose. They are not one and the same. Our strategic aim is to
progressively transform our portfolio by actively encouraging adult smokers to
switch to less risky products*(†) compared to smoking; a transformation
delivering long-term multi-stakeholder value.
We have reached a point in our transformation where sharper execution and
greater emphasis on fewer, bigger priorities that deliver meaningful returns
is required. We will use our market archetype model, which identifies
different stages of New Category maturity to guide us, ensuring our priorities
deliver on our strategy and are well articulated with clear business outcomes
defined.
I am pleased with our performance in a number of key areas. We increased the
number of consumers of non-combustible products(1) by a further 900,000 in Q1,
driving good revenue growth and further reducing losses of New Categories
means we are on track to deliver our £5bn revenue ambition in 2025, with
profitability in 2024, irrespective of the timing of the transfer of our
Russian and Belarusian businesses.
Outside the U.S., combustible brands have been performing well as we address
portfolio gaps and optimise pricing. Consistently driving value from our
combustibles brands is critical, as they deliver substantial cash returns and
generate value to fund New Categories and our transformation.
We are also making good progress towards de-leveraging our balance sheet,
supporting our ambition to sustainably return excess cash to shareholders.
That said, there are operational issues that will have my focus. Our
performance in U.S. combustibles has been disappointing. Returning
combustibles to consistent value creation is critical to our multi-category
strategy in the U.S. We are taking action, and while it will take some time
to carefully and thoroughly implement our plans, our volume share has grown
sequentially since the start of the year.
glo has had an underwhelming start to 2023, albeit recent momentum is more
encouraging. glo Hyper Air is a step forward in what promises to be an
exciting pipeline ahead.
I am determined to manage external risks thoughtfully and transparently
through continuing to increase our engagement with regulators, policymakers,
and relevant stakeholders. I have made it clear to my senior management team
and the organisation that we must operate to the highest ethical standards,
and this topic must remain a priority for both our employees and business
partners.
2023 is going to be complex and exciting in equal measure. BAT has a wonderful
heritage. I am committed to building a new, modern BAT - one that is agile and
progressive, inclusive and collaborative. It is our exceptionally talented
people, our pipeline of innovation and portfolio of winning brands, that will
ensure we perform and transform simultaneously. I have great confidence this
can be achieved.
We continue to maintain our full year 2023 guidance."
Trading update detail
Sharpening execution in combustibles and the U.S.
o Group cigarette volume share up 10 bps and value share down 40 bps, mainly
due to the implementation of commercial plans in the U.S.
o Outside the U.S., we have been performing well with reinvigorated
portfolios, refreshed brands and sharpened execution supported by optimised
pricing offset by some geographic mix
o The U.S. industry premium segment shows early signs of stabilisation with
our premium volume share sequentially growing since the start of the year
o In California, the longer-term impact of the flavour ban currently remains
difficult to assess. Menthol products are reportedly still being sold
illicitly due to lack of enforcement; and we have also seen elevated flavoured
volume in surrounding states
o Our full year volume performance will be second-half weighted in the U.S.,
given the H1 volume impact of SAP-related inventory phasing
We have extended Vuse's global leadership(2)
o Vuse value share up 2.8 ppts, reaching 38.8% in key Vapour markets(3),
driven by extended volume and value share U.S. leadership
o Continuing to approach the growing modern disposables segment in a
responsible way; Vuse Go is now available in 40 markets
o Establishing Vuse platforms in Emerging Markets, including Colombia and
Peru, with encouraging early results
glo performance improvement after a disappointing Q1
o glo THP category volume share down 1.1 ppts to 18.2% in key markets(4)
o Continued category volume share momentum in some key European THP markets
offset by the highly competitive markets in Japan and Italy
o As part of our enhanced innovation pipeline, we recently launched our glo
Hyper Air platform in four key European THP markets, with further roll-outs
planned for H2
Velo cements European leadership, good progress in Emerging Markets
o Velo remains Modern Oral volume share leader in 15 European markets, with
Velo Mini and Velo Max continuing to demonstrate our commitment to innovation
o Velo volume share of Total Oral was up 70 bps, while volume share of
Modern Oral was down 1.8 ppts to 28.5% in key markets(5) mainly driven by the
U.S.
o Pakistan growth continues and we have rolled-out nationally in Kenya
Full year 2023 guidance
o Global tobacco industry volume expected to be down c.3%
o 3-5% organic(6) constant currency revenue growth, with performance
expected to be H2 weighted; reported growth impacted by timing of the transfer
of the Russian and Belarusian businesses expected to close in 2023
o Strong New Category revenue growth with further improvement in category
contribution alongside incremental investment
o Mid-single figure constant currency adj. diluted EPS growth, with c.2%
transactional FX headwind
o Translational foreign exchange is expected to be c.-1% headwind(7) on full
year adjusted diluted EPS growth, and c.4% tailwind(7) on half year adjusted
diluted EPS growth
o Operating cash flow conversion in excess of 90%
For further information, please contact:
Media Centre
+44 (0) 20 7845 2888 (24 hours) | @BATplc (https://twitter.com/BATplc)
Investor Relations
Victoria Buxton: +44 (0)20 7845 2012
John Harney: +44 (0)20 7845 1263
Webcast and Conference call - The conference call will begin at 9.15am (BST).
You can access the audio webcast via our website. You can also listen via conference call by dialling the numbers below, using the password: BAT
UK Toll-Free: 0808 109 0700
UK-Toll: +44 (0) 33 0551 0200
South Africa Toll-Free: 0 800 980 512
USA Toll Free: +1 866 580 3963
USA Local: +1 786 697 3501
A playback facility for the conference call will be available online via
www.bat.com (http://www.bat.com)
.
BAT attends Deutsche Bank Global Consumer Conference on 7 June 2023
Tadeu Marroco, Chief Executive, will be participating in a fireside chat at
the conference at 8.15am UK / 9.15am CEST on 7 June. The event will be
streamed live, audio-only, via our website www.bat.com
(https://eur01.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.bat.com%2F&data=05%7C01%7CJohn_Harney%40bat.com%7Cb88219625a834c19d76908db5b6b1f56%7Cff9c7474421d49578d47c4b64dec87b5%7C0%7C0%7C638204287868741525%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=mDt0HzIU2L8wJr94UnrlDmq%2Fzvb%2BljXejpY9Leq0BiQ%3D&reserved=0)
.
A playback facility will also be available online.
Market share and volume data YTD April 2023, share growth v FY2022.
* Based on the weight of evidence and assuming a complete switch from
cigarette smoking. These products are not risk free and are addictive.
(†) Our vapour product Vuse (including Alto, Solo, Ciro and Vibe), and
certain products, including Velo, Grizzly, Kodiak, and Camel Snus, which are
sold in the U.S., are subject to FDA regulation and no reduced-risk claims
will be made as to these products without agency clearance.
(1) The number of consumers of Non-Combustible products is defined as the
estimated number of Legal Age (minimum 18 years, U.S.: 21 years) consumers of
the Group's Non-Combustible products. In markets where regular consumer
tracking is in place, this estimate is obtained from adult consumer tracking
studies conducted by third parties (including Kantar). In markets where
regular consumer tracking is not in place, the number of consumers of
Non-Combustible products is derived from volume sales of consumables and
devices in such markets, using consumption patterns obtained from other
similar markets with adult consumer tracking (utilising studies conducted by
third parties including Kantar). The number of consumers is adjusted for those
identified (as part of the consumer tracking studies undertaken) as using more
than one BAT Brand - referred to as "poly users". Target market for
acquisition is existing adult smokers/nicotine users.
The number of consumers of Non-Combustible products is used by management to
assess the number of consumers regularly using the Group's New Category
products as the increase in Non-Combustible products is a key pillar of the
Group's ESG ambition and is integral to the sustainability of our business.
The Group's management believes that this measure is useful to investors given
the Group's ESG ambition and alignment to the sustainability of the business
with respect to the Non-Combustibles portfolio.
(2) Based on Vuse estimated value share from reduced-risk products in measured
retail for Vapour (i.e., total Vapour category value in retail sales) in the
Top 5 Vapour markets.
(3) Top 5 Vapour markets: U.S. - Marlin, Canada - Scan Data, UK - Nielsen IQ,
France - Strator, Germany - Nielsen IQ. These five markets cover an estimated
c.80% of global closed system revenue.
(4) Top 12 THP markets: Japan - CVS-BC, South Korea - CVS, Italy - Nielsen IQ,
Greece - Nielsen IQ, Hungary - NDN, Kazakhstan - Nielsen IQ, Ukraine - Nielsen
IQ, Poland - Nielsen IQ, Switzerland - IMS, Romania - Nielsen IQ, Malaysia -
IPSOS, Czech Republic - Nielsen IQ. The THP 12 Top markets were adjusted in H1
2023, with more established THP markets Kazakhstan, Romania, Switzerland and
Malaysia introduced and Russia removed in advance of the planned exit this
year. Accordingly, glo's category volume share for 2022 was rebased on the new
T12 definition (excluding Russia) from 19.4% to 19.2%. The T12 THP markets
account for c.80% of total industry THP revenue.
(5) Top 5 Modern Oral markets: U.S. - Marlin, Sweden - Nielsen IQ, Denmark -
Nielsen IQ, Norway - Nielsen IQ, Switzerland - Scan Data (excl. SPAR, Top CC
and Alligro). These five markets cover an estimated c.80% of total industry
Modern Oral revenue.
(6) To supplement the Group's results presented in accordance with
International Financial Reporting Standards (IFRS), the Group's Management
Board, as the chief operating decision maker, reviews certain of its results,
including volume, revenue, adjusted profit from operations and adjusted
operating margin, at constant rates of exchange, prior to the impact of
businesses sold or held-for-sale. Although the Group does not believe that
these measures are a substitute for IFRS measures, the Group does believe that
such results excluding the impact of businesses sold or to be held-for-sale
provide additional useful information to investors regarding the underlying
performance of the business on a comparable basis and in the case of the
expected sale of the Group's businesses in Russia and Belarus, the impact
these businesses have on revenue and profit from operations. Accordingly, the
organic financial measures appearing in this document should be read in
conjunction with the Group's results as reported under IFRS. We also provide
in this release the reconciliations of volume to organic volume, revenue to
organic revenue at constant rates of exchange, profit from operations to
organic adjusted profit from operations at constant rates of exchange and
operating margin to organic adjusted operating margin at constant rates of
exchange. In 2021, the Group sold its Iranian business. However, as the
Iranian business was not significant to the user's understanding of that
year's or subsequent years' financial performance, management did not treat
the sale of Iranian business as an organic adjustment.
(7) Based on current exchange rates of USD/GBP 1.24825 as at close on 2 June
2023.
Share growth refers to volume share for THP and Modern Oral and value share
for Vapour
As used herein, volume share refers to the estimated retail sales volume of
the product sold as a proportion of total estimated retail sales volume in
that category and value share refers to the estimated retail sales value of
the product sold as a proportion of total estimated retail sales value in that
category. Please refer to the 2022 Annual Report on Form 20‐F for a full
description of these measures, together with a description of other Key
Performance Indicators (KPIs), on pages 322 and 323.
New Categories comprises Tobacco Heating Products (THP), Vapour and Modern
Oral. Our products as sold in the US, including Vuse, Velo, Grizzly, Kodiak,
and Camel Snus, are subject to Food and Drug Administration (FDA) regulation
and no reduced-risk claims will be made as to these products without FDA
clearance.
New regional structure restatements
The Group's results for the six-month period ended 30 June 2022 and year ended
31 December 2022, are presented below to reflect the implementation of the
previously announced regional structure. This will provide a consistent basis
for the organic performance measurements of the Group for the six-month period
ending 30 June 2023 and year ending 31 December 2023. These are provided prior
to the announcement of the Group's half-year report for the period ending 30
June 2023 (due to be released on 26 July 2023).
The information provided also includes the Group's results on an organic
basis, reflecting the ongoing expectation with regards to the transfer of the
Group's operations in Russia and Belarus.
While these reclassifications affect the presentation of regional results,
they do not affect the Group's reported income statement, balance sheet, or
cash flow.
SUMMARY ANALYSIS OF REVENUE AND PROFIT FROM OPERATIONS BY SEGMENT
Six months ended 30 June 2022
Reported Exchange At CC(2) Inorganic Organic at CC(2)
Revenue £m £m £m £m £m
U.S. 5,934 (388) 5,546 - 5,546
AME 4,243 85 4,328 (368) 3,960
APMEA 2,692 65 2,757 - 2,757
Total Region 12,869 (238) 12,631 (368) 12,263
Reported Adj Items(1) Adjusted Exchange Adjusted(1) at CC(2) Inorganic Adj organic at CC(2)
Profit from Operations £m £m £m £m £m £m £m
U.S. 2,801 335 3,136 (218) 2,918 - 2,918
AME 508 975 1,483 43 1,526 (92) 1,434
APMEA 369 657 1,026 20 1,046 - 1,046
Total Region 3,678 1,967 5,645 (155) 5,490 (92) 5,398
Year ended 31 December 2022
Reported Exchange At CC(2) Inorganic Organic at CC(2)
Revenue £m £m £m £m £m
U.S. 12,639 (1,281) 11,358 - 11,358
AME 9,287 (168) 9,119 (813) 8,306
APMEA 5,729 67 5,796 - 5,796
Total Region 27,655 (1,382) 26,273 (813) 25,460
Reported Adj Items(1) Adjusted Exchange Adjusted(1) at CC(2) Inorganic Adj organic at CC(2)
Profit from Operations £m £m £m £m £m £m £m
U.S. 6,205 630 6,835 (740) 6,095 - 6,095
AME 2,926 422 3,348 (80) 3,268 (276) 2,992
APMEA 1,392 833 2,225 38 2,263 - 2,263
Total Region 10,523 1,885 12,408 (782) 11,626 (276) 11,350
Notes to the analysis of revenue and profit from operations above:
1. Adjusting items represent certain items which the Group considers
distinctive based upon their size, nature or incidence.
2. CC: constant currency - measures are calculated based on a re-translation,
at the prior year's exchange rates, of the current year's results of the Group
and, where applicable, its segments.
REGIONAL REVIEW
The performances of the regions are discussed below. The following discussion
is based upon the Group's internal reporting structure. For further
information on regional performance by category, see "Additional Information
on Revenue by Category by Region.
UNITED STATES (U.S.):
Six months ended 30 June 2022 Volume (unit) Revenue (£m)
Reported Inorganic Organic Reported Exchange Reported at CC(2) Inorganic at CC(2) Organic at CC(2)
Unit Unit Unit £m £m £m £m £m
New Categories 414 (27) 387 - 387
Vapour (10ml units/pods mn) 166 - 166 402 (26) 376 - 376
THP (sticks bn) - - - - - - - -
Modern Oral (pouches mn) 179 - 179 12 (1) 11 - 11
Traditional Oral (stick eq bn) 3.5 - 3.5 580 (38) 542 - 542
Total Non-Combustibles 994 (65) 929 - 929
Total Combustibles (sticks bn) 30 - 30 4,928 (322) 4,606 - 4,606
Other 12 (1) 11 - 11
Total 5,934 (388) 5,546 - 5,546
Adjusted PfO (£m)
Adjusted operating margin (%)
Reported Adjusting items(1) Exchange Adjusted(1) at CC(2) Inorganic at CC(2) Adj organic at CC(2)
Profit from Operations (PfO) 2,801 335 (218) 2,918 - 2,918
Operating Margin 47.2% 52.6% 52.6%
Year ended 31 December 2022 Volume (unit) Revenue (£m)
Reported Inorganic Organic Reported Exchange Reported at CC(2) Inorganic at CC(2) Organic at CC(2)
Unit Unit Unit £m £m £m £m £m
New Categories 949 (95) 854 - 854
Vapour (10ml units/pods mn) 320 - 320 913 (92) 821 - 821
THP (sticks bn) - - - - - - - -
Modern Oral (pouches mn) 301 - 301 36 (3) 33 - 33
Traditional Oral (stick eq bn) 6.6 - 6.6 1,174 (119) 1,055 - 1,055
Total Non-Combustibles 2,123 (214) 1,909 - 1,909
Total Combustibles (sticks bn) 59 - 59 10,470 (1,061) 9,409 - 9,409
Other 46 (6) 40 - 40
Total 12,639 (1,281) 11,358 - 11,358
Adjusted PfO (£m)
Adjusted operating margin (%)
Reported Adjusting items(1) Exchange Adjusted(1) at CC(2) Inorganic at CC(2) Adj organic at CC(2)
Profit from Operations (PfO) 6,205 630 (740) 6,095 - 6,095
Operating Margin 49.1% 53.7% 53.7%
Notes to the analysis of revenue and profit from operations above:
1. Adjusting items represent certain items which the Group considers
distinctive based upon their size, nature or incidence.
2. CC: constant currency measures are calculated based on a re-translation, at
the prior year's exchange rates, of the current year's results of the Group
and, where applicable, its segments.
REGIONAL REVIEW
AMERICAS AND EUROPE (AME):
Six months ended 30 June 2022 Volume (unit) Revenue (£m)
Reported Organic Reported Exchange Reported at CC(2) Inorganic at CC(2) Organic at CC(2)
Unit Unit Unit £m £m £m £m £m
New Categories 578 10 588 (60) 528
Vapour (10ml units/pods mn) 112 - 112 189 (1) 188 - 188
THP (sticks bn) 5.7 (2.3) 3.4 240 6 246 (58) 188
Modern Oral (pouches mn) 1,337 (21) 1,316 149 5 154 (2) 152
Traditional Oral (stick eq bn) 0.4 - 0.4 18 1 19 - 19
Total Non-Combustibles 596 11 607 (60) 547
Total Combustibles (sticks bn) 143 (22) 121 3,485 82 3,567 (308) 3,259
Other 162 (8) 154 - 154
Total 4,243 85 4,328 (368) 3,960
Adjusted PfO (£m)
Adjusted operating margin (%)
Reported Adjusting items(1) Exchange Adjusted(1) at CC(2) Inorganic at CC(2) Adj organic at CC(2)
Profit from Operations (PfO) 508 975 43 1,526 (92) 1,434
Operating Margin 12.0% 35.3% 36.2%
Year ended 31 December 2022 Volume (unit) Revenue (£m)
Reported Inorganic Organic Reported Exchange Reported at CC(2) Inorganic at CC(2) Organic at CC(2)
Unit Unit Unit £m £m £m £m £m
New Categories 1,300 (18) 1,282 (138) 1,144
Vapour (10ml units/pods mn) 261 - 261 465 (10) 455 - 455
THP (sticks bn) 12.0 (5.2) 6.8 494 (12) 482 (133) 349
Modern Oral (pouches mn) 3,083 (49) 3,034 341 4 345 (5) 340
Traditional Oral (stick eq bn) 0.8 - 0.8 35 2 37 - 37
Total Non-Combustibles 1,335 (16) 1,319 (138) 1,181
Total Combustibles (sticks bn) 294 (43) 251 7,588 (125) 7,463 (669) 6,794
Other 364 (27) 337 (6) 331
Total 9,287 (168) 9,119 (813) 8,306
Adjusted PfO (£m)
Adjusted operating margin (%)
Reported Adjusting items(1) Exchange Adjusted(1) at CC(2) Inorganic at CC(2) Adj organic at CC(2)
Profit from Operations (PfO) 2,926 422 (80) 3,268 (276) 2,992
Operating Margin 31.5% 35.8% 36.0%
Notes to the analysis of revenue and profit from operations above:
1. Adjusting items represent certain items which the Group considers
distinctive based upon their size, nature or incidence.
2. CC: constant currency measures are calculated based on a re-translation,
at the prior year's exchange rates, of the current year's results of the Group
and, where applicable, its segments.
REGIONAL REVIEW
ASIA-PACIFIC, MIDDLE EAST AND AFRICA (APMEA)
Six months ended 30 June 2022 Volume (unit) Revenue (£m)
Reported Inorganic Organic Reported Exchange Reported at CC(2) Inorganic at CC(2) Organic at CC(2)
Unit Unit Unit £m £m £m £m £m
New Categories 291 14 305 - 305
Vapour (10ml units/pods mn) 14 - 14 26 - 26 - 26
THP (sticks bn) 5.3 - 5.3 257 14 271 - 271
Modern Oral (pouches mn) 254 - 254 8 - 8 - 8
Traditional Oral (stick eq bn) - - - - - - - -
Total Non-Combustibles 291 14 305 - 305
Total Combustibles (sticks bn) 139 - 139 2,361 52 2,413 - 2,413
Other 40 (1) 39 - 39
Total 2,692 65 2,757 - 2,757
Adjusted PfO (£m)
Adjusted operating margin (%)
Reported Adjusting items(1) Exchange Adjusted(1) at CC(2) Inorganic at CC(2) Adj organic at CC(2)
Profit from Operations (PfO) 369 657 20 1,046 - 1,046
Operating Margin 13.7% 38.0% 38.0%
Year ended 31 December 2022 Volume (unit) Revenue (£m)
Reported Inorganic Organic Reported Exchange Reported at CC(2) Inorganic at CC(2) Organic at CC(2)
Unit Unit Unit £m £m £m £m £m
New Categories 645 32 677 - 677
Vapour (10ml units/pods mn) 31 - 31 58 (1) 57 - 57
THP (sticks bn) 12.0 - 12.0 566 33 599 - 599
Modern Oral (pouches mn) 626 - 626 21 - 21 - 21
Traditional Oral (stick eq bn) - - - - - - - -
Total Non-Combustibles 645 32 677 - 677
Total Combustibles (sticks bn) 268 - 268 4,972 44 5,016 - 5,016
Other 112 (9) 103 - 103
Total 5,729 67 5,796 - 5,796
Adjusted PfO (£m)
Adjusted operating margin (%)
Reported Adjusting items(1) Exchange Adjusted(1) at CC(2) Inorganic at CC(2) Adj organic at CC(2)
Profit from Operations (PfO) 1,392 833 38 2,263 - 2,263
Operating Margin 24.3% 39.0% 39.0%
Notes to the analysis of revenue and profit from operations above:
1. Adjusting items represent certain items which the Group considers
distinctive based upon their size, nature or incidence.
2. CC: constant currency measures are calculated based on a re-translation, at
the prior year's exchange rates, of the current year's results of the Group
and, where applicable, its segments.
Additional Information on Revenue by Category by Region
Six months ended 30 June 2022
Volume (unit)
U.S. AME APMEA Group
2022 % change 2022 % change 2022 % change 2022 % change
New Categories
Vapour 166 +19.4% 112 +11.4% 14 +112.5% 292 +18.6%
THP - - 5.7 +51.4% 5.3 +13.8% 11.0 +30.4%
Modern Oral 179 -55.7% 1,337 +26.1% 254 +78.9% 1,770 +10.1%
Traditional Oral 3.5 -4.4% 0.4 -8.9% - - 3.9 -4.9%
Total Non-Combustibles
Cigarettes 30.0 -13.4% 135.4 -1.5% 138.0 -4.1% 303.4 -4.0%
OTP 0.1 -18.8% 7.2 -12.0% 0.9 -1.5% 8.2 -11.0%
Total Combustibles 30.1 -13.4% 142.6 -2.1% 138.9 -4.1% 311.6 -4.2%
Memo: Cigarettes and THP 30.0 -13.4% 141.1 -0.1% 143.3 -3.6% 314.4 -3.1%
Revenue - reported at current rates (£m)
U.S. AME APMEA Group
2022 % change 2022 % change 2022 % change 2022 % change
New Categories 414 +70.4% 578 +51.8% 291 +12.7% 1,283 +45.4%
Vapour 402 +71.1% 189 +28.9% 26 +62.1% 617 +55.2%
THP - - 240 +99.2% 257 +8.1% 497 +38.6%
Modern Oral 12 +50.7% 149 +31.2% 8 +84.0% 169 +34.2%
Traditional Oral 580 +7.9% 18 -10.8% - - 598 +7.2%
Total Non-Combustibles 994 +27.4% 596 +48.6% 291 +12.7% 1,881 +30.7%
Total Combustibles 4,928 +3.3% 3,485 +3.2% 2,361 -0.9% 10,774 +2.3%
Other 12 -13.4% 162 +11.8% 40 -19.0% 214 +2.9%
Total 5,934 +6.7% 4,243 +8.2% 2,692 +0.1% 12,869 +5.7%
Of which:
Strategic 5,621 +6.7% 3,091 +14.5% 1,441 +2.2% 10,153 +8.3%
Non-strategic 313 +6.0% 1,152 -5.7% 1,251 -2.2% 2,716 -2.9%
5,934 +6.7% 4,243 +8.2% 2,692 +0.1% 12,869 +5.7%
Revenue - organic at constant rates (£m)
U.S. AME APMEA Group
2022 % change 2022 % change 2022 % change 2022 % change
New Categories 387 +59.2% 528 +54.1% 305 +18.1% 1,220 +45.0%
Vapour 376 +59.9% 188 +28.0% 26 +60.4% 590 +48.2%
THP - - 188 +104.1% 271 +14.1% 459 +44.2%
Modern Oral 11 +40.9% 152 +34.9% 8 +86.3% 171 +37.0%
Traditional Oral 542 +0.9% 19 -5.2% - - 561 +0.6%
Total Non-Combustibles 929 +19.0% 547 +51.1% 305 +18.1% 1,781 +24.5%
Total Combustibles 4,606 -3.4% 3,259 +5.6% 2,413 +1.3% 10,278 +0.6%
Other 11 -19.0% 154 +6.2% 39 -21.1% 204 -1.9%
Total 5,546 -0.3% 3,960 +10.3% 2,757 +2.5% 12,263 +3.7%
Of which:
Strategic 5,254 -0.3% 3,156 +16.9% 1,482 +5.1% 9,892 +5.5%
Non-strategic 292 -1.0% 804 -4.2% 1,275 -0.3% 2,371 -2.1%
5,546 -0.3% 3,960 +10.3% 2,757 +2.5% 12,263 +3.7%
Year ended 31 December 2022
Volume (unit)
U.S. AME APMEA Group
2022 % change 2022 % change 2022 % change 2022 % change
New Categories
Vapour 320 +10.0% 261 +15.3% 31 +73.2% 612 +14.3%
THP - 0.0% 12.0 +42.7% 12.0 +12.3% 24.0 +25.6%
Modern Oral 301 -50.1% 3,083 +30.5% 626 +89.0% 4,010 +21.7%
Traditional Oral 6.6 -8.1% 0.8 -9.8% - - 7.4 -8.3%
Total Non-Combustibles
Cigarettes 58.7 -15.4% 279.5 -2.5% 266.4 -5.2% 604.6 -5.1%
OTP 0.2 -17.8% 14.6 -10.5% 1.7 -6.8% 16.5 -10.3%
Total Combustibles 58.9 -15.5% 294.1 -2.9% 268.1 -5.2% 621.1 -5.2%
Memo: Cigarettes and THP 58.7 -15.4% 291.5 -1.2% 278.4 -4.6% 628.6 -4.2%
Revenue - reported at current rates (£m)
U.S. AME APMEA Group
2022 % change 2022 % change 2022 % change 2022 % change
New Categories 949 +68.7% 1,300 +47.0% 645 +6.3% 2,894 +40.9%
Vapour 913 +62.9% 465 +41.4% 58 +55.1% 1,436 +54.9%
THP 0 -69.1% 494 +68.8% 566 +1.1% 1,060 +24.3%
Modern Oral 36 n/m 341 +29.9% 21 +114.4% 398 +45.3%
Traditional Oral 1,174 +8.9% 35 -12.3% - - 1,209 +8.2%
Total Non-Combustibles 2,123 +29.5% 1,335 +44.4% 645 +6.3% 4,103 +29.4%
Total Combustibles 10,470 +4.5% 7,588 +5.7% 4,972 +2.8% 23,030 +4.5%
Other 46 +27.9% 364 +7.0% 112 +2.8% 522 +7.6%
Total 12,639 +8.1% 9,287 +10.0% 5,729 +3.2% 27,655 +7.7%
Of which:
Strategic 12,018 +8.5% 6,768 +15.5% 3,099 +2.5% 21,885 +9.6%
Non-strategic 621 +1.4% 2,519 -2.5% 2,630 +4.0% 5,770 +0.8%
12,639 +8.1% 9,287 +10.0% 5,729 +3.2% 27,655 +7.7%
Revenue - organic at constant rates (£m)
U.S. AME APMEA Group
2022 % change 2022 % change 2022 % change 2022 % change
New Categories 854 +51.6% 1,144 +45.1% 677 +11.5% 2,675 +37.0%
Vapour 821 +46.4% 455 +38.4% 57 +53.0% 1,333 +43.8%
THP 0 -72.3% 349 +64.7% 599 +7.0% 948 +26.7%
Modern Oral 33 n/m 340 +31.6% 21 +111.9% 394 +45.6%
Traditional Oral 1,055 -2.1% 37 -7.7% - - 1,092 -2.3%
Total Non-Combustibles 1,909 +16.3% 1,181 +42.8% 677 +11.5% 3,767 +19.4%
Total Combustibles 9,409 -6.1% 6,794 +4.0% 5,016 +3.8% 21,219 -0.6%
Other 40 +14.9% 331 -1.3% 103 -4.3% 474 -0.8%
Total 11,358 -2.8% 8,306 +8.0% 5,796 +4.4% 25,460 +2.3%
Of which:
Strategic 10,799 -2.5% 6,664 +13.7% 3,162 +4.6% 20,625 +3.3%
Non-strategic 559 -8.9% 1,642 -5.0% 2,634 +4.2% 4,835 -1.3%
11,358 -2.8% 8,306 +8.0% 5,796 +4.4% 25,460 +2.3%
Note on Non-GAAP Measures
The Group's Management Board regularly reviews the measures used to assess and
present the financial performance of the Group and, as relevant, its
geographic segments, and believes that these measures provide additional
useful information to investors. Certain of our measures are presented based
on an adjusted basis and on a constant currency basis. Please refer to the
2022 Annual Report on Form 20‐F for a full description of each measure
alongside non-financial measures, pages 322 to 336.
One non-GAAP measure which the Group uses and that is contained in this
announcement is adjusted diluted earnings per share which is before the impact
of adjusting items and is derived from diluted earnings per share. This
announcement also contains operating cash conversion, a non-GAAP measure
defined as net cash generated from operating activities before the impact of
adjusting items and dividends from associates and excluding trade loans to
third-parties, pension short fall funding, taxes paid and after net capital
expenditure, as a proportion of adjusted profit from operations.
Adjusting items, as identified in accordance with the Group's accounting
policies, represent certain items of income and expense which the Group
considers distinctive based on their size, nature or incidence. These include
significant items in, profit from operations, net finance costs, taxation and
the Group's share of the post‐tax results of associates and joint ventures
which individually or, if of a similar type, in aggregate, are relevant to an
understanding of the Group's underlying financial performance. Although the
Group does not believe that these measures are a substitute for IFRS measures,
the Group does believe such results excluding the impact of adjusting items
provide additional useful information to investors regarding the underlying
performance of the business on a comparable basis.
The Group's Management Board reviews a number of our IFRS and non‐GAAP
measures for the Group and its geographic segments at constant rates of
exchange. This allows comparison of the Group's results, had they been
translated at the previous year's average rates of exchange. The Group does
not adjust for the normal transactional gains and losses in operations that
are generated by exchange movements. Although the Group does not believe that
these measures are a substitute for IFRS measures, the Group does believe that
such results excluding the impact of currency fluctuations year‐on‐year
provide additional useful information to investors regarding the operating
performance on a local currency basis.
Forward looking statements
References in this announcement to 'BAT', 'Group', 'we', 'us' and 'our' when
denoting opinion refer to British American Tobacco p.l.c. (BAT PLC) and when
denoting business activity refer to BAT Group operating companies,
collectively or individually as the case may be.
This announcement does not constitute an invitation to underwrite, subscribe
for, or otherwise acquire or dispose of any BAT PLC shares or other
securities. This announcement contains certain forward-looking statements,
including "forward-looking" statements made within the meaning of the U.S.
Private Securities Litigation Reform Act of 1995. These statements are often,
but not always, made through the use of words or phrases such as "believe,"
"anticipate," "could," "may," "would," "should," "intend," "plan,"
"potential," "predict," "will," "expect," "estimate," "project," "positioned,"
"strategy," "outlook", "target" and similar expressions. In particular, these
forward-looking statements include statements regarding the Group's ambition
to reach £5bn of New Categories revenue in 2025 and profitability in 2024,
the Group's combustibles full year volume performance being second-half
weighted, further glo Air rollouts in the second half of the year, statements
under the heading "Full year guidance" and the Group's results on an organic
basis, reflecting the ongoing expectation with regards to the transfer of the
Group's
operations in Russia and Belarus. These include statements regarding our
intentions, beliefs or current expectations concerning, amongst other things,
our results of operations, financial condition, liquidity, prospects, growth,
strategies and the economic and business circumstances occurring from time to
time in the countries and markets in which the Group operates.
All such forward-looking statements involve estimates and assumptions that are
subject to risks, uncertainties and other factors. It is believed that the
expectations reflected in this announcement are reasonable but they may be
affected by a wide range of variables that could cause actual results and
performance to differ materially from those currently anticipated.
Among the key factors that could cause actual results to differ materially
from those projected in the forward-looking statements are uncertainties
related to the following: the impact of competition from illicit trade; the
impact of adverse domestic or international legislation and regulation; the
inability to develop, commercialise and deliver the Group's New Categories
strategy; adverse litigation and dispute outcomes and the effect of such
outcomes on the Group's financial condition; the impact of significant
increases or structural changes in tobacco, nicotine and New Categories
related taxes; translational and transactional foreign exchange rate exposure;
changes or differences in domestic or international economic or political
conditions; the ability to maintain credit ratings and to fund the business
under the current capital structure; the impact of serious injury, illness or
death in the workplace; adverse decisions by domestic or international
regulatory bodies; changes in the market position, businesses, financial
condition, results of operations or prospects of the Group; and direct and
indirect adverse impacts associated with climate change and the move towards a
circular economy.
Past performance is no guide to future performance and persons needing advice
should consult an independent financial adviser. The forward-looking
statements reflect knowledge and information available at the date of
preparation of this announcement and BAT undertakes no obligation to update or
revise these forward-looking statements, whether as a result of new
information, future events or otherwise. Readers are cautioned not to place
undue reliance on such forward-looking statements.
No statement in this announcement is intended to be a profit forecast and no
statement in this announcement should be interpreted to mean that earnings per
share of BAT PLC for the current or future financial years would necessarily
match or exceed the historical published earnings per share of BAT PLC.
Additional information concerning these and other factors can be found in BAT
PLC filings with the U.S. Securities and Exchange Commission (SEC), including
the Annual Report on Form 20-F and Current Reports on Form 6-K, which may be
obtained free of charge at the SEC's website, http://www.sec.gov
(http://www.sec.gov) , and the Group's Annual Reports, which may be obtained
free of charge from the British American Tobacco website http://www.bat.com
(http://www.bat.com) .
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