BAT H12020 performance unabated amid COVID-19 pandemic

  • Profit from operations up by 16.4%
  • Revenue marginally rose by 0.8%

Harare – Cigarette manufacturer British American Tobacco (BAT), parent to BAT Zimbabwe posted a positive performance for the half year period ended 30 June 2020 compared to the same period last year.

In a half year publication, the group said profit from operations increased by 16.4% to £5 097 million from prior comparable period while revenue remained stable, marginally increasing by 0.8% to £12 271 million compared to the same period last year.

Chief Executive Jack Bowles said “10% of our revenues come from non-combustible categories. We are making good progress towards our target of 50 million non-combustibles consumers by 2030.”

 He added that the group invested an additional £250 million in New Categories marketing.

BAT registered a strong cigarette price/mix of 8.5% which reflects the strength of the group’s differentiated brand portfolio.

Bowles commented that this offsets lower cigarette and THP volumes which were down 6.3%.

During the period under review, BAT highlighted that Non-Combustibles consumer base increased to 11.6 million (up 1.1 million from December 2019), being an increase of 2.7 million consumers on a rolling 12 month basis from June 2019 while new categories revenue grew 12.7% (at constant rates).

We are growing volume share in THP and value share in Vapour, with Modern oral adjusted revenue up 71% (at constant rates).

Cigarette volume share was up 50 bps and value share up 20 bps driven by the strength of the Group’s differentiated cigarette portfolio.

Bowles added that strategic cigarettes and THP portfolio now accounts for 66% of total cigarettes and THP volume.

In light of the COVID-19 pandemic he said, “We are navigating COVID-19 supported by a diverse market footprint o Consumption trends in Developed Markets (75% of Group adjusted revenue) remain robust, with good pricing and little evidence to date of accelerated down-trading.

In Emerging Markets, we are growing cigarette and THP volume share strongly, up 70 bps. Volumes are strong where we see illicit trade reduction and can leverage our operational agility. We continue to anticipate a full year headwind of around 3% from COVID-19 on constant currency adjusted revenue.”

Bowles also said the group is on track to deliver against its 2020 guidance.

“We maintain our medium-term post COVID-19 guidance of 3-5% constant currency adjusted revenue growth and high-single figure constant currency adjusted diluted EPS growth. We are committed to our 65% dividend pay-out ratio.”

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