BAT takes USD 1.2 billion hit from Russian exit

British American Tobacco (BAT) has announced it took a GBP 957 million (USD 1.15 billion) impairment charge related to the transfer of its Russian business, pushing half-year earnings 25 per cent lower, reports Reuters.

BAT, which controlled nearly a quarter of the Russian market, said in June it was in advanced talks with its distributor in the country to sell the business. An agreement to transfer the shares has not yet been reached, BAT said.

The company reported a 25 per cent drop in profit from operations on a reported basis to GBP 3.68 billion for the six months to 30 June as a result of the charge, according to the report.

BAT expects global tobacco industry volume to decline by about 3 per cent, partly due to the Russia-Ukraine crisis. “While we are not immune to the current macro environment, we are confident in our full-year guidance, irrespective of the timing of the transfer of our Russian business,” the company said in a statement.
Its first-half revenue exceeded expectations, rising 5.7 per cent to GBP 12.87 billion, driven by higher prices and steady demand for its vaping and oral nicotine products. “We expect to generate 40 billion pounds of free cash flow before dividends over the next five years,” CEO Jack Bowles said.
Adjusted operating margin of 43.9 per cent was above company-compiled estimates of 43.5 per cent. Shares were up 0.7 per cent in early trading, Reuters said.

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