British American Tobacco has reduced its revenue and earning guidance following a bigger slump in demand than expected within emerging markets.
The FTSE 100 heavyweight singled out emerging markets such as Bangladesh, Vietnam and Malaysia as regional areas where the effect of the pandemic has been ‘more pronounced’ on the business than expected. Within South Africa, a tobacco sales-banis still present and BAT revealed that there were no signs of it being lifted.
Therefore, it has adjusted previous revenue and revenue guidance. FY constant currency adjusted revenue growth is now expected in the 1-3% range and a mid-single adjusted diluted EPS growth is expected – previously a ‘high-single’ figure was expected for EPS growth.
Despite the headwinds, it will maintain its dividend pay-out ratio of 65% for the year.
“We have made a good start to the year, with strong volume and value share growth in combustibles underpinning the sustainability of the business. Our focus on becoming a faster, simpler, more agile business through Project Quantum has positioned us well for continued delivery in the current environment and these efforts have ensured we are a highly resilient company.
We are delivering on our three key priorities:
We are driving value growth in combustiblesJack Bowles, Chief Executive, BAT
We are continuing to invest behind growth and the New Categories
We are transforming the business with the completion of phase 1 of Project Quantum.”
The share price of BAT closed down by 3% on Tuesday following the trading update.