8th Feb 2024 13:09
(Alliance News) - Shares in British American Tobacco PLC lit up on Thursday after saying it was looking to sell its stake in Indian conglomerate, ITC Ltd, plus reporting progress in 'new category' sales.
Shares in BAT rose 5.2% to 2,440.50 pence in London on Thursday, while shares in ITC fell 4.0% to INR414.45 in Bombay.
The London-based maker of cigarettes and vapes said it regularly reviews its stake in ITC, "a significant shareholding which offers us the opportunity to release and reallocate some capital".
"We have been actively working for some time on completing the regulatory process required to give us the flexibility to monetise some of our shareholding," BAT continued.
Analysts at Jefferies said it was the "strongest signal yet that working towards selling part of the stake".
ITC is a Kolkata, India-based company. It is India's biggest cigarette maker but has diversified into other businesses including luxury hotels. BAT owns a 29% stake valued at around GBP14 billion.
The comments came as BAT reported results for 2023 which showed revenue fell 1.3% to GBP27.28 billion from GBP27.66 billion in 2022.
The company swung to a pretax loss of GBP17.06 billion from a profit of GBP9.32 billion a year prior.
Notably, depreciation, amortisation and impairment costs ballooned to GBP28.61 billion from GBP1.31 billion.
BAT explained that the depreciation costs include a non-cash impairment charge of GBP27.3 billion, mainly relating to its acquired US combustible brands.
Russ Mould at AJ Bell said the figures contained a "nugget of good news" as the company has hit profitability with its 'new categories' products.
"These include its big vaping brands Vuse and Velo and these 'new categories' sales are seen as the company's answer to declining levels of cigarette smoking in the west," he explained.
But he pointed out as the push for new rules on vaping in the UK demonstrate though, "the regulatory pressure on British American Tobacco is likely to remain unrelenting."
Analysts at Jefferies, which has a 'buy' rating on BAT said sentiment towards the stock was "worse than we have ever known it in 14 years of coverage".
But, it said with the ITC comments, as well as no change to the dividend policy "we see this as a net positive for sentiment".
BAT declared a total dividend of 235.52 pence per share for 2023, up 2.0% from 230.9p a year prior.
BAT emphasised that it was committed to dividend growth in sterling terms.
By Jeremy Cutler, Alliance News reporter
Comments and questions to [email protected]
Copyright 2024 Alliance News Ltd. All Rights Reserved.
Related Shares:
British American Tobacco