30th Apr 2020 09:40
(Alliance News) - British American Tobacco PLC said Thursday that following a strong operational performance in 2019, it expects to report earnings growth for 2020 despite the impact from Covid-19 being "difficult to predict".
The London and Johannesburg-listed tobacco firm said it had made a strong start to the year, with positive volume growth benefiting from a rise in trade and consumer stocks, and a strong price mix.
Despite the Covid-19 pandemic, BAT said most of its factories have remained open at full capacity, and the group has built up an average stock of two months in finished goods.
To date, BAT has seen a limited impact on consumer demand, pricing or the ability of consumers to access products as a result of nationwide lockdowns implemented around the world.
Although sales in global travel retail have been significantly hit, this represents less than 1% of group sales.
"The impact from Covid-19 is difficult to predict. We are anticipating a reduction in trade and consumer stocks and some effect on industry volume and revenue growth in Q2. This, together with some delayed launches in New Categories, means we expect results to be weighted to the second half," said BAT.
BAT expects high single figure growth in earnings per share on a constant currency basis in 2020.
This is based on expectations of constant currency adjusted revenue growth at the low end of the 3% to 5% range, despite global industry cigarette and tobacco heated product volumes expected to decline by around 5%.
For 2019, BAT reported adjusted revenue at constant rates of GBP25.68 billion, with earnings per share at 321.6 pence.
"We remain committed to continuing the transformation of our business in 2020. Despite ongoing uncertainties resulting from the Covid-19 pandemic, the resilience of our supply chain in combination with the dedication of our teams means that I am confident we will continue to deliver. We maintain our commitment to high single figure constant currency adjusted diluted EPS growth," said Chair Richard Burrows.
Shares in British American Tobacco were down 0.2% at 3,140.5 pence on Thursday in London, while its Johannesburg shares were 0.6% lower at ZAR708.02.
By Dayo Laniyan; [email protected]
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