British American Tobacco said in a pre-close market update on June 4 that the tobacco maker expects its 2024 profitability to be negatively impacted by declining cigarette sales and increasing competition from illicit vapes in the United States.
The Wall Street Journal reports that analysts predict BAT will generate £27.60 billion ($35.35 billion) in total organic sales and £12.48 billion in adjusted operating profit this year.
The U.S. was beginning to show some early indications of recovery, according to BAT, but the sector as a whole has seen a 9 percent decline in conventional cigarette volumes this year.
The predicted fall in BAT's first-half sales and earnings was "more pronounced" than anticipated, according to Chris Beckett, head of equities research at Quilter Cheviot, who spoke with Reuters.
Although it anticipates a low single-digit decline in half-year sales and adjusted profit from operations, the firm maintains that it is on pace to meet its full-year projection.
"We anticipate that our performance will be predominantly second-half driven, primarily by wholesaler inventory movements associated with our ongoing investment in our U.S. commercial actions, in addition to the gradual introduction of new products," said Tadeu Marroco, CEO of BAT.
The continuous macroeconomic challenges, especially in the US market, and the persistent absence of effective action against the expanding illegal vapor market are also reflected in our recommendations. We thus anticipate that, on an organic, constant currency basis, our H1 sales and adjusted profit from operations would decline by low single digits.
