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(Alliance News) - British American Tobacco PLC on Friday said annual profit rose on the back of cost reductions, while the tobacco company's transformation towards healthier smoking alternatives gained further momentum from a 42% rise in New Categories revenue.
The London-based maker of cigarettes and other smoking products reported pretax profit for 2021 of GBP9.16 billion, up 5.7% from GBP8.67 billion a year prior.
This was helped by a 15% reduction in net finance costs to GBP1.49 billion from GBP1.75 billion.
Revenue slipped 0.4% to GBP25.68 billion from GBP25.78 billion.
Segmentally, New Categories - which include vapour and oral products - saw revenue rise 42% to GBP2.05 billion from GBP1.44 billion.
"Continued growth in New Categories is a cornerstone of BAT's long-term plans for success. With over 1.1 billion smokers still consuming combustibles, the opportunity to convert consumers towards New Categories is highly attractive to the company," said Ross Hindle, senior analyst at research firm Third Bridge.
Combustibles - which include traditional smoking products - revenue fell 3.2% to GBP22.03 billion from GBP22.75 billion.
BAT noted that cigarette volumes were broadly flat with emerging markets beginning to recover from the impact of Covid-19 the year before, including Bangladesh, Pakistan, Vietnam, Brazil and Chile, more than offset by volume decline in Indonesia, US, Ukraine, Russia and Japan.
BAT declared a final dividend of 217.8 pence per share, which will be paid in four equal quarterly instalments of 54.45p. This was a 1.0% rise on 2020's 215.6p dividend.
A GBP2 billion share repurchase programme for 2022 also was announced.
Looking ahead, BAT expects global tobacco industry volume to be down around 2.5% in 2022. For itself, BAT expects constant currency revenue growth of 3% to 5%, as well as high-single figure constant currency adjusted earnings per share growth, with growth second half weighted.
"We are on a path to deliver GBP5 billion of revenue and profitability from New Categories by 2025 and are developing opportunities Beyond Nicotine, leveraging our knowledge and capabilities from New Categories," Chief Executive Jack Bowles said.
BAT shares were 1.1% lower to ZAR668.86 each in Johannesburg on Friday morning, and were up 0.4% to 3,283.00p each in London in opening trade.
By Greg Roxburgh; gregroxburgh@alliancenews.com
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