Tobacco giant BAT eyes lower revenue

British American Tobacco (BAT), where former Irish Distillers boss Richard Burrows is chairman, has cut revenue expectations for its tobacco heating and vapour products this year, blaming a US product recall and a flat Japanese market.

The company, one of the world’s biggest tobacco firms, owns brands such as Benson & Hedges and Dunhill.

It expects to generate sales of £900m (€1.02bn) from its alternative tobacco and nicotine product lines this year, compared to the £1bn it had originally anticipated.

The sales remain a relatively small part of BAT’s total revenue of just over £20bn (€22.7bn) last year.

Despite the lower revenue expectation for the tobacco heating and vaping products, both categories are expected to post substantial revenue increases in the current financial year.

Its vaping products will deliver double-digit volume and constant currency revenue growth this year, said BAT, while its revenue from tobacco heating products is expected to “grow substantially”.

Tobacco heating products (THP) heat tobacco to a temperature where it releases nicotine and some other substances, but does not burn the tobacco. According to BAT, this releases fewer toxic particles.

BAT describes its vaping and THP lines as Potentially Reduced Risk Products.

CEO Nicandro Durante said BAT has a “great pipeline” of new product launches in coming months in the category.

“Our combustible tobacco business continues to perform well,” he said. “We remain on track for a strong performance in 2018.”