Global tobacco and smokeless product producer British American Tobacco is steadily lowering annual cigarette production volumes and increasing the sale of smokeless product units as consumer preferences change. Picture: Supplied
British American Tobacco (BAT) is optimistic about 2025 due to the resilience of the business and the diversity of the group, its markets and products.
The group, with over 48 000 employees globally, has returned over £27.5 billion (about R638 billion) to shareholders over the last five years through dividends and share buy-backs. The share buybacks started with £700 million in 2024, and a further £900m is committed for 2025, Tadeu Marroco, the CEO,said in the annual report released on Monday.
“We have also continued to reduce leverage and closed the year within our narrowed target range. The group aims to de-leverage its gross debt levels (£37bn in 2024) and moderate the annual net financing cost levels to better support the overall strategy,” he said.
Net financing costs of £1.1bn in 2024 included a net gain from a debt liability management exercise of £590m. On an adjusted basis, net finance costs were £1.6bn. Group revenue fell by 5.2%, largely due to the negative impact of the sale of the businesses in Russia and Belarus, partway through 2023, and a translational currency headwind.
“I am pleased with the acceleration of our performance in the second half of the year, driven by the phasing of New Categories innovation and the benefits of investment in US commercial actions, together with the unwind of related wholesaler inventory movements. In the US, I am encouraged that our investment approach is strengthening our business, despite a challenging macroeconomic backdrop and the continued prevalence of illicit single-use nicotine products,” said Marroco.
Performance would be improved further through sharper execution and by opening up untapped growth opportunities, particularly related to Modern Oral, this after the group’s New Categories segment delivered another strong performance after achieving profitability two years ahead of plan last year, he said.
Revenue from smokeless products accounted for 17.5% of group revenue. The direction towards selling more smokeless nicotine products was evidenced by the fact that it produced 505 million cigarettes in the 2024 financial year, down from 555 million cigarettes in 2023 and 605 million cigarettes in 2022.
By contrast, the number of smokeless product sales increased to 29.1 million units in 2024, from 25.5 million units in 2023 and 22.3 million units in 2022.
“Looking ahead to the next few years, our efforts will be focused on delivery and innovation across the markets we serve globally. Through continued investment in our brands and prioritising adult consumers and their preferences, the board believes we are well placed to maximise opportunities in tobacco and nicotine as consumer preferences evolve,” he said.
BUSINESS REPORT
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