British American Tobacco shares slumped 8% as the cigarette maker said it will write down the value of its cigarette brands by £25 billion ($31.5 billion).
The company
BATS,
BTI,
said the write-down is on its acquired U.S. combustibles brands, as it assesses its value over 30 years. U.S. brands it holds include Camel and Newport.
The company, which said its 2023 EPS will be in line with previous guidance on low-end organic revenue growth, said its U.S. business next year will be hit by macroeconomic pressures on the combustibles market as well as competing demand from illicit disposable vapes. It’s forecasting low-single-digit revenue and adjusted profit from operations growth next year, and the performance to be weighted toward the second half.
The company said it will take until 2026 to get to 3% to 5% organic revenue growth and mid-single-digit adjusted profit from operations growth.
The company is shifting its focus to noncombustible products like vaping.
It also said its adjusted net debt-to-EBITDA ratio will be 2.7 by the end of the year, which analysts at Citi took to mean a share buyback was unlikely until the first half of next year at the earliest.
Read the full article here
