BAT’s full-year results, which include the full year effect of the acquisition of Reynolds American Inc. (RAI), saw the company post increases of 25.2 per cent in revenue and a 45.2 per cent in operating profit at GBP 9.3 billion (EUR 10.8 billion).
Adjusted to exclude the impact of the merger and currency exchange, BAT’s revenue and operating profits for 2018 were up 6 per cent and 7 per cent respectively, at constant currency rates. The company said the 7 per cent increase in operating profit amounted to GBP 10.9 billion (EUR 12.7 billion).
The Group shipped 708 billion cigarette and heated tobacco product (THP) units in an increase of 3.3 per cent compared to 2017 volume. Volumes were down in three of the company’s other four operating regions. 157 billion cigarettes were shipped in the Americas and Sub-Saharan Africa region, a decrease of 5.4 per cent. 77 billion units were shipped to the US, down 5.3 per cent. The company shipped 246 billion units in the Europe/North African region, a decrease of 5.3 per cent, while volume was up 0.7 per cent in the Asia-Pacific region, at 228 billion units.
BAT said sales of its next-generation tobacco products contributed GBP 901 million in adjusted revenue in 2018. THP sales were listed as GBP 576 million (up over 180 per cent) and vapour sales GBP 325 million (26 per cent higher).
Volumes of the company’s Global Drive Brands grew 5.5 per cent on a representative basis. Dunhill volume was down 6.1 per cent, Kent volume up 1.7 per cent, Lucky Strike volume down 1 per cent, Pall Mall volume up 20.4 per cent, and Rothmans volume up 19.7 per cent, BAT said.
CEO Nicandro Durante commended “BAT performed well in 2018, exceeding our target of high single figure adjusted constant currency EPS growth, whilst continuing to invest in long-term sustainable returns. The full year effect of the RAI acquisition and a translational foreign exchange headwind of approximately 6 per cent (on revenue and profit from operations) and 7 per cent (on EPS) distorted the Group’s results. On an adjusted, constant currency, representative basis, this was a strong performance across the business.”
Durante recognized that “the proposed potential regulatory changes in the US have created some investor uncertainty. We have a long experience of managing regulatory developments, a track record of delivering strong growth while investing for the future and an established multi-category approach. I am confident that my successor, Jack Bowles, will continue to deliver a similar level of sustainable long-term returns as we accelerate our Transforming Tobacco agenda. Looking into 2019 we are confident of another year of high single figure adjusted constant currency earnings growth and this confidence is reflected in our Board’s proposal to increase the dividend by 4 per cent”.
Durante will retire in April after nearly 37 years with the company and eight years as CEO. His successor will be Jack Bowles, who is currently chief operating officer of BAT’s international business.
The company also announced the resignation of finance director Ben Stevens, who will retire from the board on August 5 after three decades with BAT. Stevens will be replaced by Tadeu Marroco, who is currently director for group transformation at the company.