British American Tobacco (BAT) has announced a significant annual loss after a substantial charge on its US business, resulting in a pre-tax loss of £17.1 billion for 2023 compared to a previous year’s profit of £9.3 billion. The tobacco and vape group attributed the loss to a £27.3 billion writedown on its US brands, exceeding the £25 billion forecasted in December.
The company cited its long-term strategy to move away from traditional cigarettes, alongside decreased sales amidst economic uncertainty and the rise of illicit single-use vapour products, as factors contributing to the substantial charge. Additionally, uncertainty surrounding a potential menthol ban in the US further impacted its performance.
BAT emphasised that currency movements since the initial estimation contributed to the higher charge. Despite an anticipated 3% decline in global tobacco industry sales volume, BAT reaffirmed its previous guidance of “low single-digit” organic revenue and underlying earnings growth for the year.
CEO Tadeu Marroco assured that the impending disposable vape ban in the UK and the government’s proposal for a generation ban on cigarettes would not significantly affect BAT’s UK business. Marroco clarified that the US-specific write-down resulted from BAT’s 2017 acquisition of the remaining 57.8% stake in Reynolds American for $49 billion.
Furthermore, Marroco stated that the disposable vape ban in the UK, aimed at curbing youth vaping and safeguarding children’s health, would have minimal impact on the group. Disposable vape products, particularly the Vuse Go brand, constitute 42% to 50% of BAT’s UK vaping business, which accounts for approximately half of all UK sales.
