British American Tobacco (BAT), the owner of a number brands of cigarettes including Lucky Strike, Pall Mall and Camel, reported an almost 9 per cent growth in its profits even though the noted lower sales of its products partially because of the Covid-19 pandemic.
There was an almost 5 per cent drop in the sale of the number of cigarettes sold in 2020, BAT said. The pandemic induced travel restrictions imposed globally – particularly on air travel, hit the duty-free trade sale of the company while a sales ban in South Africa linked to the pandemic also resulted in lower sales, it said. However at the same time, an increase in prices of its cigarettes also meant that the total value of the sales increased.
There was a 52 per cent rise in the sales of vaping kit which BAT sells under the Vuse and Vype brands, on the overall last year with a 40 per cent growth in online vape sales with more than 17,500 people signed up as regular subscribers to BATs brands.
Last year, there were about 13.5 million consumers for its “non-combustible” products, compared to just 3 million in the previous year, said Jack Bowles, the chief executive of BAT.
The company reported pre-tax annual profits rise to £8.7bn.
A set of measures implemented by BAT in cost savings, which touched £660m last year, combined with the strength of its brands and growth in smoking alternatives, helped the company to find out a way to a “comfortable profit”, said Richard Hunter, the head of markets at Interactive Investor. But a close watch on its £40bn of net debt has ot be kept by the company, he said.
The stocks of the company have however dropped by more than 50 per cent since 2017.
“The industry is one where, quite apart from changing tastes, the threat of litigation and regulation have been an overhang for some considerable time. Further out is the possibility that investors will eschew the tobacco sector as an investment destination given the growing popularity of ethical considerations,” Hunter said.
Tests of its first cannabidiol (CBD) vaping products was started by the company in Manchester last month which is a part of the target of the company to secure £5bn in sales of new products by 2025.
(Adapted from TheGuardian.com)