British American Tobacco (BAT) has started to reap the rewards of its transition into new products such as vaping, as the global tobacco industry looks to shrink 2.5 per cent this year.
While total revenue slipped 0.4 per cent to £25.6bn in comparison with 2020, the tobacco giant’s revenue from new categories swelled more than 50 per cent to £2.1bn.
The company has also announced a £2bn share buyback this year, in a bid to grow returns for shareholders who have awaited progress in its new categories.
“New category losses reduced for the first time, contributing to earnings growth… while at the same time delivering strong financial results: 2021 has been a pivotal year,” CEO Jack Bowles said in a statement.
“We are on a path to deliver £5bn of revenue and profitability^ from new categories by 2025 and are developing opportunities beyond nicotine, leveraging our knowledge and capabilities from new categories.”
Dividends per share inched one per cent higher to 217.8p, BAT confirmed in its preliminary results for the year to December 31.
While operating profit also dipped 0.7 per cent to £9.7bn, the company’s borrowings declined 9.8 per cent as it managed to trim its losses.
Bowles added: “With leverage within our target range and expectations for c.£40bn of free cash flow before dividends over the next five years we will continue to invest in a faster transformation and deliver strong returns to shareholders.
“The BAT of tomorrow will be a high-growth, consumer centric, multi-category consumer goods company.”
The tobacco company has also posted a Coca-Cola and Unilever veteran to its board as a non-executive director.
Krishnan “Kandy” Anand, who is based in the US, joins as Marion Helmes steps down.