BAT Says No Material Impact Yet From COVID-19 Outbreak
British American Tobacco, the world's No.2 tobacco maker, said on Wednesday it has not yet seen a material impact from the COVID-19 outbreak, even as certain launches had to be postponed due to supply chain disruptions in China.
"Although supply chains in China are recovering... we are seeing some disruption in activation," Chief Executive Officer Jack Bowles said, ahead of the company's capital markets day on Wednesday.
The maker of Dunhill and Lucky Strike cigarettes also said while it has seen a small dip in sales of combustible tobacco due to the outbreak, it does not expect to revise its previous forecasts to reflect further declines in industry-wide tobacco volumes.
BAT said it continues to expect industry sales of cigarette and tobacco heating products to fall around 4% in 2020, with volumes in the United States set to slide by around 5%.
Since taking charge last April, Bowles has taken steps to slim down the company amid declining sales of traditional cigarettes. He shifted resources to "new category" businesses, which include its Vuse e-cigarettes and glo tobacco heating products.
On Wednesday, he said the company would extend its cost-savings program labeled 'Quantum' to save a further 1 billion pounds over three years that will be redirected into new categories.
Bowles expects revenue growth from the category to be "difficult" in the first half of the year, but said the business would meet the company's target of 5 billion pounds in revenue by 2023/24.
The London-based company maintained its forecast for constant currency adjusted revenue growth in the range of 3% to 5%, and earnings per share growth (EPS) in high single digits for the year.
Shares of the company were flat in noon trading, in contrast to a 4.5% drop in the broader FTSE that has been roiled by the relentless spread of coronavirus globally.