Shares Slump as Company Shifts Focus to Noncombustible Products
- British American Tobacco to write down cigarette brands by $31.5 billion
- Shares slump 8% as company assesses value of acquired U.S. brands
- Macro pressures and competition from illicit vapes to impact U.S. business
- Company shifting focus to noncombustible products like vaping
- Adjusted net debt-to-EBITDA ratio suggests share buyback unlikely until next year
British American Tobacco shares slumped 8% as the company announced a write-down of £25 billion ($31.5 billion) on the value of its cigarette brands. The write-down primarily affects its acquired U.S. combustibles brands, including Camel and Newport. The company expects its U.S. business to face challenges from macroeconomic pressures and competition from illicit disposable vapes. As a result, it is shifting its focus to noncombustible products like vaping. The company forecasts low-single-digit revenue and adjusted profit growth next year, with the performance weighted towards the second half. It anticipates achieving 3% to 5% organic revenue growth and mid-single-digit adjusted profit growth by 2026. Additionally, the company’s adjusted net debt-to-EBITDA ratio suggests that a share buyback is unlikely until the first half of next year at the earliest.
Public Companies: British American Tobacco (BATS)
Private Companies:
Key People:
Factuality Level: 7
Justification: The article provides information about British American Tobacco’s decision to write down the value of its cigarette brands and its shift towards noncombustible products. The information provided seems to be based on the company’s statements and forecasts. However, the article lacks in-depth analysis and context, and it does not provide any opposing viewpoints or expert opinions. Therefore, while the information presented may be factually accurate, the article could benefit from more comprehensive reporting.
Noise Level: 3
Justification: The article provides relevant information about British American Tobacco’s decision to write down the value of its cigarette brands. It mentions the reasons for the write-down and the company’s shift towards noncombustible products. However, the article lacks in-depth analysis, evidence, and actionable insights. It also contains some repetitive information and does not explore the consequences of the decision on stakeholders.
Financial Relevance: Yes
Financial Markets Impacted: British American Tobacco shares
Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The article pertains to the financial topic of British American Tobacco’s write-down of the value of its cigarette brands, which caused a slump in its shares.
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