LONDON (Reuters) – British American Tobacco said on Wednesday it would suffer a loss of around 25 billion pounds (29.20 billion euros) after writing down the value of some U.S. cigarette brands, acknowledging that its historic market has no long-term future.
This decision comes at a time when increasingly strict regulations and growing awareness of the health risks of tobacco are weighing on the traditional activities of tobacco companies.
The maker of Lucky Strike and Dunhill cigarettes also highlighted economic challenges in the United States, where some consumers hit by inflation are turning to cheaper brands, and the rise of disposable e-cigarettes.
These factors will result in a depreciation of approximately 25 billion pounds with no impact on cash flow, BAT said.
This adjustment concerns certain American brands such as Newport, Camel, Pall Mall and Natural American Spirit, said a spokesperson.
In London, BAT shares fell 8.44% at 1:45 p.m. GMT, to their lowest level in four and a half years and thus reducing the company’s valuation by around 4 billion pounds.
However, like its rivals, BAT has invested heavily in tobacco alternatives, including vaping products.
The group announced on Wednesday its ambition to generate 50% of its turnover from non-combustible products by 2025, specifying that it expected its activities in these “new categories” to reach the threshold of profitability in 2023, a year earlier than expected.
BAT also said it now expects full-year revenue growth to be at the lower end of the range of between 3 and 5%.
The company also expects high-single-digit growth in revenue and adjusted operating profit in 2024.
(Reporting Emma Rumney; French version Dagmarah Mackos, editing by Kate Entringer)
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