British American Tobacco has raised its full-year revenue guidance after the hit to cigarette demand from the pandemic was less than feared.
The world’s second-biggest cigarette maker, which owns brands such as Dunhill and Lucky Strike, said its revenue hit from the Covid-19 crisis will be 2.5 per cent, down from an earlier estimate of 3 per cent.
Global cigarette and tobacco product sales are now expected to decline by around 5 per cent this year, better than previous guidance of a 7 per cent contraction.
The company had feared that coronavirus awareness campaigns around the world highlighting the increased susceptibility to the virus from smoking would significantly damage revenue.
“We continue to be clear that combustible cigarettes pose serious health risks, and the only way to avoid these risks is not to start or to quit,” said BAT chief executive Jack Bowles.
“While the environment remains uncertain, due to the continuing challenges of Covid-19, the business is performing strongly… Reducing the health impact of our business through providing a range of enjoyable and less risky products is the greatest contribution we can make to society. “
The FTSE 100 firm said it saw “continued resilience” in developed market volumes and an improvement in emerging market volumes.
Its Vuse vape is now the fastest growing international e-cigarette brand, and the top vape product in the US, Canada, UK, France and Germany.
BAT said it will boost spending by around £200m on vaping and nicotine pouches in the second half of the financial year, in a bid to“capitalise on investment opportunities and good momentum in the business”.