BAT Group anticipates poor results if COVID-19 persists

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  • Reduction in consumer demand anticipated
  • Disruptions to Group’s supply chain likely

British American Tobacco Group anticipates a significant adverse material impact to its business if the coronavirus continues to affect key geographies or if the situation deteriorates for an extended period.

 The Group said it continues to monitor developments closely as the COVID-19 pandemic develops but to date, the impact of the virus on the Group’s business has not been material.

In a report released recently, the Group said “the impact of the COVID-19 pandemic to the Group’s business will depend on a range of factors which we are not able to accurately predict, including the duration and scope of the pandemic, the geographies impacted, the impact of the pandemic on economic activity and the nature and severity of measures adopted by governments”.

The Group projects reductions or volatility in consumer demand for one or more of its products due to retail closures, illness, quarantine or other travel restrictions, economic hardships and customer-downtrading which may in turn affect the Group’s market share.

In addition, the Group anticipates the deterioration of socio-economic conditions and disruptions to the Group’s operations, such as its supply chain or manufacturing and distribution capabilities which may result in increased costs due to the need for more complex supply chain arrangements, to expand existing facilities or to maintain inefficient facilities or in  a reduction of the Group’s sales volumes.

Significant volatility in financial markets and measures adopted by governments and central banks that further restrict liquidity is also likely going to limit the Group’s access to funds, leading to shortages of cash and cash equivalents needed to operate the Group’s business and impact its ability to refinance its existing debt.

The Group said all these factors may have material adverse effects on the Group’s results of operations.

A number of countries and businesses globally have been seeking aid from other organisations after suffering loses from the deadly virus with firms such as the IMF and World Bank stepping in to offer financial aid to hard hit countries while in countries like China governments are moving to bail out some companies affected by the virus.

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