Why British American Tobacco's ADRs hit an all-time high

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  • British American Tobacco said it was losing cigarette customers and would accelerate its transition to selling different tobacco products.
  • Camel maker Lucky Strike and other brands will take on a $31.5 billion charge linked to the tobacco crisis. American demand and the change in strategy.
  • BAT's American depositary receipts fell to an all-time low following the news.

British American Tobacco's (BTI) American depositary receipts (ADRs) fell more than 8% in early trading Wednesday to an all-time low as the cigarette maker said it was losing U.S. customers who were switching to low-cost cigarettes and considering changing course. its focus on smoke-free products.

The maker of Camel, Lucky Strike and other brands explained that in the United States, “macroeconomic pressures and the continued proliferation of illicit modern disposable products have continued to impact industry volume fuels during the second half of the year. He added that it was also facing pressure in the premium segment market after a more stable first half.

BAT said it plans to accelerate the company's transformation by moving away from selling traditional cigarettes and encouraging customers to switch to other tobacco products. The company calls this plan “Building a Smoke-Free World.”

It said that due to macroeconomic difficulties in the United States and the change in strategy, it would take into account a non-cash impairment charge of around 25 billion pounds ($31.5 billion). BAT noted that the charges primarily relate to the US brands it has acquired and that it will now “assess their carrying value and useful economic life over an estimated period of 30 years”. The company announced it would begin writing off the remaining value of its U.S. fuel brands in January.

BAT noted that Due to all these changes, it expects revenue and profit growth in the low single digits in 2024, with gradual improvement up to a 3% to 5% increase in revenues. revenue and a mid-single-digit profit gain by 2026.


Source: investopedia.com

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