By Eva Matthews
(RockedBuzz via Reuters) – British American Tobacco maintained its full-year revenue and earnings forecast on Tuesday and said performance would be weighted towards the second half as it grapples with weaker demand for cigarettes in the United States.
“Our performance in US fuels was disappointing,” newly appointed Chief Executive Officer Tadeu Marroco said in a statement.
BAT said the number of consumers of non-fuel products grew by 900,000 globally in the first quarter, but growth in the U.S. cigarette market slowed as price-sensitive consumers switched to cheaper brands.
Cigarette maker Lucky Strike said global tobacco industry volume is now expected to decline by about 3% in 2023, up from a previous forecast of a 2% decline.
US peers Altria and Philip Morris also missed quarterly sales expectations as demand for cigarettes fell.
“BATS has previously hinted that it has seen signs of a decline in smokers in its key US market and that is starting to show in the numbers now,” said Derren Nathan, an analyst at Hargreaves Lansdown.
London-listed BAT also took a hit from a voter-approved ban on flavored tobacco products in California, America’s most populous state, though it said sales of its flavored products in surrounding states had surged .
BAT has increased investment in e-cigarettes and so-called heat-not-burn devices as consumers switch to tobacco-free products.
The volume share of its glo tobacco heater product fell 1.1 percentage points to 18.2% in key markets, according to the first-half pre-closing trading update, while Vuse vapes’ share is grew by 2.8 percentage points, reaching 38.8%.
Government efforts to regulate these alternatives – whose colorful designs and fruity flavors appeal to teenagers – along with the threat of illicit sales remain a stumbling block.
Cigarette maker Dunhill continues to expect organic revenue growth of 3% to 5% in 2023 at constant exchange rates and mid-single-digit growth in adjusted earnings per share.
(Reporting by Eva Mathews in Bangalore; Editing by Subhranshu Sahu, Kirsten Donovan)
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