British American Tobacco confirmed falling annual sales and profit expectations on Tuesday, saying that the company’s focus will now be on the year’s second half. The corporation is doing this because cigarette sales are falling in the United States.
Tadeu Marroco, the company’s newly appointed CEO, issued a statement expressing his dissatisfaction with the company’s performance in the United States.
According to a statement released by BAT, the global user base for non-combustible products grew by 900,000 in the first quarter, whereas the cigarette sector in the United States grew more slowly as price-conscious consumers switched to less expensive brand names.
An increase from the previous forecast of a loss of about 2% has led the business that manufactures Lucky Strike cigarettes to expect a loss of roughly 3% in the global tobacco market in 2023.
U.S. rivals Altria and Philip Morris fell short of quarterly sales targets due to dwindling cigarette demand.
In its most important market, the United States, BAT had previously intimated that it had noticed evidence of smokers downtrading.
Voter approval of a ban on flavored tobacco in the most populated state in the United States, California, was a blow to BAT, even though the business claimed higher sales of flavored tobacco products in nearby states.
BAT has upped its investments in non-tobacco items, including electronic cigarettes, as fewer people use traditional tobacco products.
According to the company’s first-half pre-close trading report, glo tobacco heating saw a 1.1 percentage point drop in volume share to 18.2% in key nations, while Vuse Vapes saw a 2.8 percentage point gain in volume share to 38.8%.
There is still the specter of illicit sales and the government’s attempts to regulate these substitutes, which are popular among teenagers due to their colorful designs and pleasant aromas.
The Dunhill tobacco maker expects the same rise in organic sales (at constant currency rates) and adjusted earnings per share (in the mid-single digits) in 2023 as in 2018.