BATS cheers vape and non-traditional product growth

British American Tobacco gained 900,000 additional users of non-combustible products such as vapes in the first quarter amid continued smoking cessation.

In the company’s first business update since becoming chief executive last month, Tadeu Marroco said the achievement not only boosted revenue but also reduced losses within the company. BAT’s “new categories” activity.

Velo remains the group’s most popular modern oral brand in 15 European countries, while Vuse increased its value share to 38.8% in the top five steam markets in the UK, US, Canada , France and Germany.

Marroco said tobacco-related sales are “doing well” except for “disappointing” sales in the United States, where it sells the Camel and Newport brand of cigarettes.

As BAT, like other tobacco companies, gradually moves away from traditional products, Marroco added that “returning fuels to consistent value creation” is “critical” to the company’s US strategy.

He said, “We are taking action, and while it will take some time to carefully and thoroughly implement our plans, our volume share has grown sequentially since the start of the year.”

BAT is leveraging the strong performance of its fuel brands to fund the development of next-generation products, such as oral nicotine pouches and vapes.

The company, which owns the Lucky Strike and Dunhill brands, said it is on track to achieve £5billion in revenue from tobacco-free alternatives by 2025 and for the division to turn a profit by next year.

Marroco, who took over from Jack Bowles on May 15, told investors that BAT was continuing with its current strategy, which he called “fair” and would be carried through.

He said: “Put simply, smokers need access to better choices. This is already a reality for smokers who have opted for our reduced risk products.

“It also represents a commitment to our consumers who continue to smoke and have not yet made the transition.”

New chef: Tadeu Marroco (pictured) took over from Jack Bowles as chief executive of British American Tobacco last month

The growth in sales of BAT’s so-called “reduced risk” products far exceeded that of tobacco-related products, the former increasing by 29.4% and the latter by only 4.5%.

In the new categories segment, Vuse sales increased by more than half to £1.44 billion, and tobacco heating product sales increased by almost a quarter to more than a quarter. billion pounds.

Yet combustible goods still accounted for around 90% of BAT’s total turnover.

BAT’s trade update comes a day after the head of Philip Morris International, owner of Marlboro and Benson & Hedges, told the Daily Mail that governments should set dates to ban cigarettes.

Jacek Olczak said that a timetable for the implementation of the measure should be established along the lines of banning vehicles powered by fossil fuels.

He added: “Looking at what the UK is doing in the car industry, saying from a certain year you’re not allowed to produce petrol cars, we could have that too. with tobacco.”

British American Tobacco Stocks were 0.2% higher at £25.76 on Tuesday morning, although they are down around 23% this year.

Charlie Huggins, head of equities at investment broker Wealth Club. said, “BATS’ share price performance over the past few years has been nothing short of disastrous.”

“But fundamentally, BATS remains an extremely cash-generating company, with the firepower to invest in the NGP transition while returning cash to shareholders.

“If the new CEO can accelerate this transition while keeping cash in shareholders’ coffers, there is room for sentiment to pick up.”