British American Tobacco aims for 50 million smoke-free customers

British American Tobacco has raised its forecast for sales of its smokeless products as demand for the group’s nicotine-infused vapes and nursing homes continues to grow.

The owner of Rothmans and Lucky Strike continues to expect its turnover and adjusted profits from operations to expand by a “single-figure” percentage this year.

Revenue from traditional tobacco products and new categories is also expected to increase during the last six months of 2024 compared to the first half.

The FTSE 100 group said vaping brand Vuse has maintained its dominance in the world’s major vapor markets such as the UK, Germany and the US.

BAT also noted that its Velo nicotine pouches enjoyed strong growth in volume, sales and profits thanks in part to the launch of the brand in the United Kingdom and Poland.

However, the firm said demand for Vuse and fuels in the US remains affected by the widespread use of illegal vapor products.

Like other cigarette sellers, BAT is gradually expanding its alternatives in response to increased public awareness of the disadvantages of tobacco.

It aims to have 50 million consumers using its non-combustible products, such as vaporizers and tobacco heaters, by 2030 and to make at least half of its sales from them by 2035.

Tadeu Marroco, CEO of BAT, said: ‘Our quality growth imperative is to generate higher returns on more targeted investments in the three new categories.

“We continue to make progress in increasing profitability in new categories and I am especially pleased with the improvements in heated products and modern orals.”

Marroco also said the company expected to have “more clarity on the financial impacts” of a legal case involving its subsidiary Imperial Tobacco Canada (ITCAN) when it releases full-year results in February.

In October, BAT revealed that it had filed a plan in a Canadian court that could potentially end major litigation.

A landmark 2015 court ruling found that ITCAN, Philip Morris and Imperial Tobacco were aware of the health problems associated with smoking, but failed to sufficiently warn their customers.

The three companies were ordered to pay C$15.6 billion in damages in a case brought by more than one million current and former smokers in Quebec, making it one of the largest class-action lawsuits ever brought in Canada.

British American Tobacco Shares They were up 0.6 per cent on Wednesday morning at 2,987 pence, taking their gains this year to around 28 per cent.

Richard Hunter, head of markets at Interactive Investor, said: “The group remains committed to a higher level of shareholder returns, including new buyback programmes, despite the investment required to transition the business.

“In the short term, however, the market consensus is that Imperial Brands remains the favorite option in the sector, while BATS remains stable, although strong.”