BAT names new director in overhaul bid

BRITISH American Tobacco has named a new finance director, continuing a management overhaul as it confronts a tougher US regulatory landscape and competition in smoking alternatives.

Finance chief Ben Stevens will be succeeded by Tadeu Marroco in August, following the planned retirement of chief executive Nicandro Durante in April.

The latest move came as the company reported full-year sales in line with analysts’ expectations, but failed to stem investors’ concerns about its outlook.

The shares fell as much as 3.4 percent early yesterday in London.

BAT says it’s confident in its ability to manage proposals by the US Food and Drug Administration to restrict sales of flavoured e-cigarettes and ban menthol cigarettes. But other challenges loom, including the appeal of a class-action court case in Quebec involving smokers who said they were never warned of the risks. A ruling is expected today.

The company also pushed back a target for revenue of £5 billion (R92.8bn) from next-generation products to 2023/2024 from 2023. That raised questions about the growth of the business, Morgan Stanley analyst Richard Taylor said in a note.

Excluding the impact of currency fluctuations and the 2017 acquisition of Reynolds American, BAT reported adjusted 2018 revenue of £25.76bn, up 3.5 percent.

Its adjusted earnings a share were 296.7 pence, up 11.8 percent in the corresponding period.

BAT forecast another year of high single-figure adjusted constant currency earnings growth.

BAT has refocused investments in cigarette alternatives to counter tightening regulation and growing competition from the likes of Philip Morris International’s IQOS and industry upstart Juul Labs. Revenue from heating products, which don’t actually burn the tobacco, nearly doubled last year.

The tobacco maker sees big growth in smoking alternatives, in which it has invested $2.5bn of research funds. It plans to roll out existing products to more markets and launch new devices.

A possible US ban on menthol cigarettes, which make up about 30 percent of the US market, could hit BAT hard because it’s the market leader in that segment. New restrictions on flavoured vaping products, meanwhile, could affect Juul more severely, giving BAT an indirect benefit. I Bloomberg