British American Tobacco reports £5.37 billion of profit in H1

on Jul 31, 2020
  • British American Tobacco reports £5.37 billion of profit in the first half.
  • BAT posts £12.27 billion in revenue and £1.57 of adjusted earnings per share.
  • The tobacco firm is awaiting FDA approval to start COVID-19 vaccine trials.

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British American Tobacco (LON: BATS) said on Friday that its profit in the first half (H1) of the current fiscal year came in higher. The company reported a decline in volume, but it was offset by cost cuts and higher demand for pricey items.

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Shares of the company tanked more than 5% on Friday. Closing at £25.24 per share, British American Tobacco is currently more than 15% down year to date in the stock market after recovering from an even lower £23.82 per share in March. Learn more about stocks and the stock market.

British American Tobacco H1 results versus analysts’ estimates

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British American Tobacco posted a 3.3% increase in its operating profit to £5.37 billion in H1. At £12.27 billion, its revenue for the period came in 1.1% higher on a year over year basis. The company registered £1.57 of adjusted earnings per share in the first half.

According to FactSet, experts had forecast the company to print a lower £12.16 billion in revenue in H1. In terms of earnings per share (EPS), their estimate was capped at £1.56 per share.

BAT highlighted volume to have tanked by 6.3% in the first six months of the ongoing financial year. It attributed the decline to the Coronavirus pandemic that brought international travel to a near halt in recent months. Higher sales of pricey cigarettes, however, still resulted in a revenue increase.

Other prominent figures in the British multinational company’s earnings report include a 14.7% jump in revenue from its “new categories” on the back tobacco heated products that saw a 9.1% growth in H1. “Modern oral” noted a 67% growth in the first half while growth in vapour came in at 41% on Friday.  

British American Tobacco’s guidance for the full year

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For the full year, BAT forecasts a 1% to 3% growth in revenue on a constant currency basis. Its adjusted EPS, the company added, is expected to grow by mid-single-digit. It now expects a lower 2.5% decline in volume in the United States versus a much higher 4% decline that it had estimated earlier in 2020. The company had lowered its annual guidance last month.

The London-based company is currently awaiting approval from the U.S. FDA to start trials for its experimental COVID-19 vaccine.

At the time of writing, the British multinational that specialises in cigarettes, tobacco, and other nicotine products is valued at £57.92 billion and has a price to earnings ratio of 10.22.

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