British American Tobacco ($BATS) on Wednesday reported solid progress towards its 2024 goals, reaffirming its focus on mid-term growth targets and enhancing shareholder returns. The tobacco giant stated it is "on track" to achieve low single-digit growth in constant-currency organic revenue and organic adjusted profit from operations in 2024.
It also anticipates a gross capital expenditure of around 600 million pounds sterling and net finance costs of about 1.6 billion pounds, subject to foreign exchange and interest rate volatility. Looking ahead, the company aims to realize mid-term revenue growth of 3% to 5% and mid-single-digit adjusted profit from operations growth, based on organic constant-currency principles, by 2026.
Chief Executive Tadeu Marroco emphasized the company's dedication to returning value to shareholders. "We will continue to reward shareholders through strong cash returns, including our progressive dividend and sustainable share buy-back," he stated. RBC Capital Markets remarked that BAT's forecast of non-linear progress toward its mid-term targets aligns with market expectations.
While the company did not explicitly confirm its proposed buybacks for 2024 and 2025, analysts believe that its shares are "already pricing in any upside" from the buyback strategies. BAT remains optimistic about enhancing revenue growth in its combustibles and new category segments for the latter half of 2024.
In the US, the combustibles division benefits from strategic pricing and targeted commercial initiatives, despite macroeconomic pressures and challenges posed by illicit single-use vapor products. In the new category segment, BAT's vaping brand, Vuse, retains its dominant global value share at 40.3% across key markets.
Despite facing pressure from illicit single-use vape sales in the US, the launch of glo Hyper Pro and improvements in consumables are driving increased volumes and profitability within heated tobacco products. The nicotine pouch brand Velo exhibited strong growth in volume, revenue, and profit, bolstered by market leadership in established regions and a growing presence in newer markets like the UK and Poland. The stock was nearly 1% higher in morning trade..