By Joe Hoppe
British American Tobacco PLC said Wednesday that first-half pretax profit fell on the back of reduced revenue and a strong comparative period, although adjusted revenue and adjusted profit rose.
The tobacco company posted a pretax profit of 4.38 billion pounds ($6.08 billion) for the first half of 2021 compared with GBP4.59 billion the prior-year period.
Revenue fell to GBP12.18 billion from GBP12.27 billion.
However, new categories revenue rose 50% to GBP942 million, and the company expects full-year losses from the segment, which includes brands such as Vype vapor and Velo oral nicotine pouches, to narrow.
On a constant exchange rate, revenue rose 8.1% and adjusted profit from operations rose 5.4%, which the company attributed to new category growth and a partial recovery from the effect of the coronavirus pandemic.
BAT--known for its Dunhill, Kent, Pall Mall and Lucky Strike cigarette brands--backed its earlier guidance of a rise in fiscal 2021 revenue to be above 5% at constant currency, and said it was on track to making GBP5 billion in revenue in its new categories segment in 2025.
The company said it had achieved its highest ever non-combustible product consumer growth over the period, with 11.8% of its overall revenue now coming from those products, which include nicotine pouches and vapor products.
BAT said it expects the second half of the year will reflect the negative effect of its geographic and portfolio mix, and a strong prior year comparator which offsets the progress from new categories. It said it expects the full-year tobacco industry global volume to reduce by 1.5%, rather than 3% as it previously guided, driven by a strong recovery in emerging markets.
The company said it plans extra investment in its new categories segment in the second half, and said it was on track to achieve operating cash flow conversion in excess of 90%. It further said it has increased its savings target to GBP1.5 billion by 2022.
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(END) Dow Jones Newswires
July 28, 2021 03:26 ET (07:26 GMT)Copyright (c) 2021 Dow Jones & Company, Inc.