Yahoo Finance Lucky Strike firm BAT reveals £957m hit from leaving Russia
Lucky Strike cigarette maker British American Tobacco (BAT) has revealed a 25% fall in half-year earnings after taking a near-£1 billion hit from its move to pull out of Russia.
The group reported a £957 million impairment charge related to the transfer of its Russian business.
It saw profit from operations drop by a quarter to £3.7 billion in the six months to June 30, largely as a result of the charge.
'New Categories growth drives Faster Transformation'
BAT has today released its Half-Year Results for the six months to 30 June 2022.
Chief Executive Jack Bowles and Finance & Transformation Director Tadeu Marroco will host a results webcast at 9am BST.https://t.co/uf2eCFcV0w pic.twitter.com/7zvUZWweGx
— BAT (@BATplc) July 27, 2022
BAT, which also makes Dunhill and Vuse vape pods, said it expects worldwide sales of tobacco by volume to fall by around 3% over the year due in part to the Ukraine war.
Chief executive Jack Bowles said: “We are not immune, of course, to the increasing macroeconomic pressures, exacerbated by the conflict in Ukraine.
“However, we are well positioned to navigate the current turbulent environment due to our powerful brands, operational agility and continued strong cash generation.”
BAT said in June that it was in advanced discussions with its distributor in Russia to sell the business, but it has not yet sealed an agreement to transfer any of the shares in the division.
Mr Bowles told the PA news agency that the company is “going through the motions” to find a solution over the Russian operation but stressed it is a “complex issue”.
It came as the boss also told PA that customer demand has remained “robust” despite rising pressure on household incomes.
“We do have many premium brands but the limited price gaps against cheaper products mean we haven’t seen customers buying down in price,” he said.
“There is also plenty of brand equity, so we have been really pleased with demand levels.”
Our 2022 Half-Year Results demonstrate how our continued growth momentum in New Categories is driving Faster Transformation at BAT, says our Chief Executive, Jack Bowles.
Read his Chief Executive's statement in BAT's 2022 Half-Year Results announcement: https://t.co/uf2eCFcV0w. pic.twitter.com/SqoQF716Go
— BAT (@BATplc) July 27, 2022
Its half-year results showed that revenues rose 5.7% to £12.9 billion, pushed higher by price rises and as demand increases for its vaping and oral nicotine products.
It stuck by its full-year guidance for revenues to grow by between 2% and 4%.
But analysts raised concerns over the hit from the Russia-Ukraine conflict to the likes of BAT and rivals such as Philip Morris International.
Ross Hindle, an analyst at Third Bridge, said: “Russia and Ukraine are very important heated tobacco markets. They are even more important for BAT than Philip Morris International, with 26% of their heated tobacco sales coming from the region historically.”
