Proactiveinvestors United Kingdom British American Tobacco PLC https://www.proactiveinvestors.co.uk Proactiveinvestors United Kingdom British American Tobacco PLC RSS feed en Thu, 27 Jun 2019 13:25:24 +0100 http://blogs.law.harvard.edu/tech/rss Genera CMS action@proactiveinvestors.com (Proactiveinvestors) action@proactiveinvestors.com (Proactiveinvestors) <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190624120005_14121992/ Mon, 24 Jun 2019 12:00:05 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190624120005_14121992/ <![CDATA[RNS press release - Branch Register: Dividend Finalisation Information ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190618070013_14114139/ Tue, 18 Jun 2019 07:00:13 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190618070013_14114139/ <![CDATA[News - Morgan Stanley warns potential law changes could stub out half of British American Tobacco's US profits ]]> https://www.proactiveinvestors.co.uk/companies/news/222231/morgan-stanley-warns-potential-law-changes-could-stub-out-half-of-british-american-tobacco-s-us-profits-222231.html Shares in British American Tobacco PLC (LON:BATS) headed lower on Monday after Morgan Stanley warned potential law changes in the US could put a serious dent in future profits.

Shares were off almost 2% in morning trading to 2,831p.

READ: BAT on track to hit full-year targets

In October, the US Food and Drug Administration is due to set out new rules on limiting the amount of nicotine – the addictive substance – in cigarettes.

“Reducing nicotine in cigarettes to non-addictive or minimally addictive levels, in our view, would be a potential game changer for the US industry,” said Morgan Stanley in a note to clients.

“While a proposed rule is not an indication of the likelihood of a final rule, we believe this event may come as a negative catalyst for the Tobacco sector.”

Analysts reckon it will be at least ten years before any new regulation comes into force, but once it does, they believe profits in the US for the big cigarette makers – BAT included – could halve.

Even without any new laws, the chin scratchers estimate the numbers of smokers across the pond will plunge to just 14mln (from 34mln) by 2030, and any future rule changes will only compound that issue.

Market not pricing in potential law changes

Despite the huge potential effect on BAT’s bottom line, Morgan Stanley isn’t convinced that the market is pricing in the possible changes.

“We believe the high impact on future profits from a potential regulation change is not fully understood or appropriately reflected in BAT's share price,” Morgan Stanley's analysts said in a note to clients.

“In our scenario analysis we take a conservative stance on new regulation, assuming regulation to reduce nicotine to non-addictive levels takes until 2035 to come into force.

“However, even in this scenario we estimate that BAT's US profits could be as much as 50% lower and ~13% of future value at risk to the market cap.”

As a result, Morgan Stanley has cut its price target to 2,600p (from 2,750p) and downgraded its recommendation for the stock to ‘underweight’.

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Mon, 17 Jun 2019 11:23:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/222231/morgan-stanley-warns-potential-law-changes-could-stub-out-half-of-british-american-tobacco-s-us-profits-222231.html
<![CDATA[News - British American Tobacco on track to meet full-year expectations ]]> https://www.proactiveinvestors.co.uk/companies/news/221958/british-american-tobacco-on-track-to-meet-full-year-expectations-221958.html British American Tobacco PLC (LON:BATS) said it is on track to meet its full-year expectations, led by strong sales of its alternative cigarette products. 

The maker of Dunhill and Lucky Strike cigarettes expects revenues on a constant currency basis to meet the mid-upper half of its long-term guidance for growth of between 3% and 5%.

BATS said adjusted operating profit growth is in line with estimates, although it didn’t provide any figures.

READ: British American Tobacco’s Canadian subsidiary granted creditor protection

Revenue from new category products, which include its Vype and Vuse vaping pens, is forecast to increase by 30% to 50% for the year.

Tobacco volumes fall 

The sharp rise in new category revenue should offset the impact of declining tobacco sales in the group’s core US market, where BAT generates about 40% of its revenue. Globally, BATS sees the volumes of cigarettes falling 3.5% over the year.

The group predicts free cash flow after dividends of £1.5bn for the year.

BATS said it plans to consolidate its new category portfolio into fewer brands. It aims for its vaping and heated tobacco products to deliver revenues of £5bn by 2023.

"We are creating a stronger, simpler business and driving a step change in new categories, built on the foundation of a strong combustible business,” said chief executive Jack Bowles.

Tougher regulation weighs on tobacco stocks

Tobacco firms have been increasingly switching away from traditional cigarettes towards e-cigarettes and heated tobacco products as consumers become more health conscious and regulators clamp down on the industry.

However, the e-cigarettes industry faces a possible US ban on menthol, aimed at curbing youth smoking. This threat has hit the shares of tobacco companies, including BATS, which has seen its market value fall by 20% over the past year.

"The threat of ongoing litigation and regulatory overhang is an inevitable – and usually sizeable - cost of doing business in the tobacco industry and the likes of BATS have been working hard to pursue new category revenue in areas such as vaping, as tobacco volumes continue to decline," said Richard Hunter, head of markets at Interactive Investor. 

"To this end, the company is making some strong progress and whilst still significantly shy of previous levels, the shares have staged something of a recovery rally in 2019, having added around 22% although of course from a lower base."

Debt reducing slowly

In a note to clients, analysts at Liberum Capital said: “The focus of the market will probably be the adjusted net debt/adjusted EBITDA guide, which the group says is reducing at around 0.4 per annum excluding FX, which is at the low end of the 0.4 - 0.5x range that the group targets.

“New Category revenue seems to suggest some softness as growth in 1H is 'approaching our FY guidance range' and the group confirms they expect an acceleration in H2, 'leading to FY growth around the middle of the 30-50% guidance range'.”

However, the analysts added; “While one could read these above points as softer than expected, expectations are already quite muted.”

Liberum repeated its ‘buy’ rating and 3,000p target price on BATS as it trades on a 9.6% FCF (free cash flow) yield.

In afternoon trading, shares in BATS were 4.6% lower at 2,930p.

 -- Adds analysts comment, updates share price -- 

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Wed, 12 Jun 2019 09:37:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/221958/british-american-tobacco-on-track-to-meet-full-year-expectations-221958.html
<![CDATA[RNS press release - First Half Pre-Close Trading Update 2019 ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190612070002_14107232/ Wed, 12 Jun 2019 07:00:02 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190612070002_14107232/ <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190610070005_14104022/ Mon, 10 Jun 2019 07:00:05 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190610070005_14104022/ <![CDATA[RNS press release - Director Declaration ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190605140003_14099968/ Wed, 05 Jun 2019 14:00:03 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190605140003_14099968/ <![CDATA[RNS press release - Total Voting Rights ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190603110003_14096119/ Mon, 03 Jun 2019 11:00:03 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190603110003_14096119/ <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190529113001_14090912/ Wed, 29 May 2019 11:30:01 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190529113001_14090912/ <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190523104504_14085232/ Thu, 23 May 2019 10:45:04 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190523104504_14085232/ <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190522070005_14082703/ Wed, 22 May 2019 07:00:05 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190522070005_14082703/ <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190517141002_14078832/ Fri, 17 May 2019 14:10:02 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190517141002_14078832/ <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190516163001_14077388/ Thu, 16 May 2019 16:30:01 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190516163001_14077388/ <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190516070005_14075844/ Thu, 16 May 2019 07:00:05 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190516070005_14075844/ <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190515114501_14075068/ Wed, 15 May 2019 11:45:01 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190515114501_14075068/ <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190515113002_14074998/ Wed, 15 May 2019 11:30:02 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190515113002_14074998/ <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190515070020_14074088/ Wed, 15 May 2019 07:00:20 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190515070020_14074088/ <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190513164502_14072126/ Mon, 13 May 2019 16:45:02 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190513164502_14072126/ <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190503124505_14062835/ Fri, 03 May 2019 12:45:05 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190503124505_14062835/ <![CDATA[RNS press release - Publication of a Prospectus ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190501135215_14059656/ Wed, 01 May 2019 13:52:15 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190501135215_14059656/ <![CDATA[RNS press release - Total Voting Rights ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190501095401_14059113/ Wed, 01 May 2019 09:54:01 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190501095401_14059113/ <![CDATA[RNS press release - Result of AGM ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190425164004_14052484/ Thu, 25 Apr 2019 16:40:04 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190425164004_14052484/ <![CDATA[RNS press release - AGM Statement ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190425114022_14052049/ Thu, 25 Apr 2019 11:40:22 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190425114022_14052049/ <![CDATA[RNS press release - TR-1 Notification ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190417134501_14045029/ Wed, 17 Apr 2019 13:45:01 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190417134501_14045029/ <![CDATA[RNS press release - TR-1 Notification ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190415113000_14041288/ Mon, 15 Apr 2019 11:30:00 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190415113000_14041288/ <![CDATA[RNS press release - TR-1 Notification ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190412120003_14039672/ Fri, 12 Apr 2019 12:00:03 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190412120003_14039672/ <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190410070005_14035162/ Wed, 10 Apr 2019 07:00:05 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190410070005_14035162/ <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190408070007_14031662/ Mon, 08 Apr 2019 07:00:07 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190408070007_14031662/ <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190404070012_14028215/ Thu, 04 Apr 2019 07:00:12 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190404070012_14028215/ <![CDATA[RNS press release - Disclosure Section 430(2B), Companies Act 2006 ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190404070002_14028127/ Thu, 04 Apr 2019 07:00:02 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190404070002_14028127/ <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190403130001_14027580/ Wed, 03 Apr 2019 13:00:01 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190403130001_14027580/ <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190403070005_14026410/ Wed, 03 Apr 2019 07:00:05 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190403070005_14026410/ <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190402070020_14024570/ Tue, 02 Apr 2019 07:00:20 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190402070020_14024570/ <![CDATA[RNS press release - Total Voting Rights ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190401133001_14023816/ Mon, 01 Apr 2019 13:30:01 +0100 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190401133001_14023816/ <![CDATA[RNS press release - Annual Financial Report ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190321080001_14010442/ Thu, 21 Mar 2019 08:00:01 +0000 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190321080001_14010442/ <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190319144503_14007891/ Tue, 19 Mar 2019 14:45:03 +0000 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190319144503_14007891/ <![CDATA[RNS press release - Annual Financial Report ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190315122503_14004373/ Fri, 15 Mar 2019 12:25:03 +0000 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190315122503_14004373/ <![CDATA[RNS press release - BAT p.l.c. Capital Markets Day ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190314070010_14001514/ Thu, 14 Mar 2019 07:00:10 +0000 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190314070010_14001514/ <![CDATA[News - British American Tobacco’s Canadian subsidiary granted creditor protection ]]> https://www.proactiveinvestors.co.uk/companies/news/216374/british-american-tobaccos-canadian-subsidiary-granted-creditor-protection-216374.html The Canadian arm of British American Tobacco plc (LON:BATS) has been granted creditor protection as it looks to avoid bankruptcy following a damning court ruling earlier this month.

Two weeks ago, Canada’s court of appeal upheld an earlier ruling that demanded the tobacco industry pay almost £8bn (C$13.6bn) in damages to thousands of Quebec smokers who successfully argued that cigarette makers failed to warn them of the health risks.

Japan Tobacco’s JTI-Macdonald business, which is also liable for the damages, filed for the same Companies’ Creditors Arrangement Act (CCAA) protection earlier this week.

READ: BAT to take £436mln hit as Canadian court upholds 2015 ruling

Had ITCAN – BAT’s Canadian subsidiary – not followed suit, it said it could have been required to pay all or part of JTI-Macdonald’s share of the judgment.

Now that it is under creditor protection, it won’t have to shell out any funds to the claimants for the time being.

“Imperial Tobacco Canada has informed us that it disagrees with the court's judgment,” said a BAT spokesperson.

“However, we understand that CCAA protection will provide Imperial Tobacco Canada with an opportunity to settle all of its outstanding tobacco litigation under an efficient and court-supervised process whilst continuing to run its business in the normal course.”

Following the 1 March ruling, ITCAN made an initial deposit of £436mln (C$768mln) into an escrow account, although its total share of the damages could be as much as £5.3bn (C$9.2bn).

Process could take years

“The filing enables ITCAN to restructure its financial affairs to avoid bankruptcy,” said Liberum analyst Nico von Stackelburg in a note to clients.

“We're told the litigation will probably take a couple of years to settle. We've previously discussed this and believe most watchers of BAT shares were aware of the potential for this outcome.”

He added: “In addition to the Quebec judgement, ITCAN is subject to sizeable healthcare recoupment damages that significantly exceed its assets, so this [protection] would enable ITCAN to continue trading while pulling together all of these judgements.”

BAT shares were down 1.5% to 3,040p on Wednesday morning.

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Wed, 13 Mar 2019 10:30:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/216374/british-american-tobaccos-canadian-subsidiary-granted-creditor-protection-216374.html
<![CDATA[RNS press release - Imperial Tobacco Canada Ltd. files for CCAA ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190313070005_13999822/ Wed, 13 Mar 2019 07:00:05 +0000 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190313070005_13999822/ <![CDATA[RNS press release - TR-1 Notification ]]> https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190311113003_13997492/ Mon, 11 Mar 2019 11:30:03 +0000 https://www.proactiveinvestors.co.uk/companies/rns/3275/LSE20190311113003_13997492/ <![CDATA[News - Shares in BAT and Imperial Brands light up as industry opponent quits the FDA ]]> https://www.proactiveinvestors.co.uk/companies/news/215936/shares-in-bat-and-imperial-brands-light-up-as-industry-opponent-quits-the-fda-215936.html Shares in multiple tobacco firms lit up on Wednesday following news that the head of the US Food and Drug Administration (FDA) had unexpectedly resigned.

Scott Gottlieb, the FDA’s chief commissioner, said that he would be leaving the role after less than two years, to spend more time with his family.

READ: Tobacco stocks puff higher as vaping firm Juul gets surprise raid from FDA

During his time at the regulator, Gottlieb has served as a thorn in the side of big tobacco, having previously led efforts to ban menthol cigarettes and curb e-cigarette use among teenagers.

Investors in FTSE 100 firms British American Tobacco PLC (LON:BATS) and Imperial Brands PLC (LON:IMB) were glad to see the back of him, with shares rising 4% to 3,017p and 1.2% to 2,608.5p respectively in late-afternoon.

In a note, analysts at Deutsche Bank said Gottlieb’s departure was “rather abrupt and surprising”, given that he had denied intentions to leave the FDA two months ago. However, they said on balance, the news was “likely positive” for the sector.

Not everyone was as enthused, with broker Liberum saying that the share price swing was “not warranted”, given a lack of clarity on the direction Gottlieb’s replacement would take on tobacco controls.

“If the probability of a menthol ban and nicotine standard were say 75%, we wouldn't say this takes the probability of it going through much below 70%.”

Analysts also highlighted that the tobacco products division of the FDA was “clearly moving down a path toward greater restrictions”, particularly in regard to combustible products (i.e. normal cigarettes) and flavoured e-cigarettes.

“It will be interesting to watch if the new appointment will pursue more farmer, retailer and tobacco manufacturer friendly policies,” they said.

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Wed, 06 Mar 2019 15:42:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/215936/shares-in-bat-and-imperial-brands-light-up-as-industry-opponent-quits-the-fda-215936.html
<![CDATA[News - BAT to make around £436mln provision after Quebec court upheld 2015 decision against Canadian unit ]]> https://www.proactiveinvestors.co.uk/companies/news/215783/bat-to-make-around-436mln-provision-after-quebec-court-upheld-2015-decision-against-canadian-unit-215783.html British American Tobacco plc (LON:BATS) will make a provision of around £436mln in its 2019 accounts after a Quebec appeal court last week upheld a 2015 decision that awarded smokers in the Canadian province around C$15bn, about £8.5bn against its  Imperial Tobacco Canada Ltd. (ITCAN) and two other firms.

In a statement on Tuesday, the FTSE 100-listed tobacco firm pointed out that, as part of the 2015 decision, ITCAN was required to place C$758mln (approximately £436mln) in escrow and said its board have determined that that asset's recoverability “is, under IFRS, less than virtually certain.” 

It said that there will be no impact from the charge to adjusted net debt to adjusted underlying earnings (EBITDA) ratio or to 2019 cash flow.

READ: BAT “extremely disappointed” Quebec class action lawsuit judgment against Canadian subsidiary not overturned

In a statement on Monday, a spokesperson for BAT had said: “We are still of the view that this decision is wrong - ignoring the reality that both adult consumers and government have known about the risk associated with smoking for decades. As a result, we believe it should be overturned.”

The spokesperson added: "Imperial Tobacco Canada Ltd. needs to review the court's decision in more detail and will decide on next steps over the coming days and weeks. Given the significance of the judgment, they have said that they fully intend to appeal the decision to the Supreme Court of Canada."

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Tue, 05 Mar 2019 07:45:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/215783/bat-to-make-around-436mln-provision-after-quebec-court-upheld-2015-decision-against-canadian-unit-215783.html
<![CDATA[News - BAT says “extremely disappointed” Quebec class action lawsuit judgment against Canadian subsidiary not overturned ]]> https://www.proactiveinvestors.co.uk/companies/news/215691/bat-says-extremely-disappointed-quebec-class-action-lawsuit-judgment-against-canadian-subsidiary-not-overturned-215691.html British American Tobacco plc (LON:BATS) has said it is “extremely disappointed” that the Quebec Court of Appeal did not overturn the smoking class action lawsuit judgment made against its Canadian subsidiary, Imperial Tobacco Canada Ltd which intends an appeal to the Supreme Court of Canada.

In an announcement on Friday, 1 March 2019, the Court of Appeal upheld the Superior Court's decision of May 2015 in two Quebec Class Action lawsuits against Imperial Tobacco Canada and two other Canadian tobacco companies, which has been going on for almost 20 years.

READ: BAT posts solid 2018 results but US regulation, Canada class action appeal a drag

In a statement on Monday, a spokesperson for BAT said: “We are still of the view that this decision is wrong - ignoring the reality that both adult consumers and government have known about the risk associated with smoking for decades. As a result, we believe it should be overturned.”

The spokesperson added: "Imperial Tobacco Canada Ltd. needs to review the court's decision in more detail and will decide on next steps over the coming days and weeks. Given the significance of the judgment, they have said that they fully intend to appeal the decision to the Supreme Court of Canada."

BAT noted that, following the release of the appeal judgment, the plaintiffs requested the immediate release of the funds on deposit, which was refused. They then filed a formal motion to release the funds, and Imperial Tobacco Canada Ltd. filed a motion to prevent the release of the funds in question.

The FTSE 100-listed firm stressed that it was not a party to the proceeding and is not a party to the judgment, only its Canadian subsidiary, Imperial Tobacco Canada.

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Mon, 04 Mar 2019 08:13:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/215691/bat-says-extremely-disappointed-quebec-class-action-lawsuit-judgment-against-canadian-subsidiary-not-overturned-215691.html
<![CDATA[News - BAT posts solid 2018 results but US regulation, Canada class action appeal a drag ]]> https://www.proactiveinvestors.co.uk/companies/news/215502/bat-posts-solid-2018-results-but-us-regulation-canada-class-action-appeal-a-drag-215502.html British American Tobacco plc (LON:BATS) saw its 2018 results beat expectations but the Lucky Strike cigarettes maker faces risks going forward including regulatory changes in the US and the result of an appeal against a class action in Canada.

For the full year ended 31 December 2018, the FTSE 100-listed firm saw its adjusted operating profit rise by 4% on a constant currency basis to  £10.34bn as adjusted revenue increased by 3.5% to £24.31bln.

READ: Stubbed out: Cowen cuts ratings for cigarette makers BAT, Imperial Brands, Altria in global sector review

The group's Tobacco Heating Products (THP) and vapour adjusted revenue jumped by 95% to £901mln, benefiting from the growth of vapour in the US, although it recognised that the proposed potential regulatory changes in the US for menthol cigarettes has created some investor uncertainty. 

Nicandro Durante, BAT's soon to depart chief executive said: “We recognise that the proposed potential regulatory changes in the US have created some investor uncertainty. I am confident that my successor, Jack Bowles, will continue to deliver a similar level of sustainable long-term returns as we accelerate our Transforming Tobacco agenda.

“Looking into 2019 we are confident of another year of high single figure adjusted constant currency earnings growth and this confidence is reflected in our Board's proposal to increase the dividend by 4%".

The company is to pay a total dividend for 2018 203p per share.

BAT is also waiting to find out if it can avoid paying £6bn to plaintiffs in the Quebec smoking class action lawsuit, with the group expecting the Quebec Court of Appeal to release its decision tomorrow, Friday 1 March 2015 on the award of CAD$15.6bn (approximately £9bn) to plaintiffs.

In a separate announcement, BAT also announced that Ben Stevens would retire as its finance director on 2 August 2019  and will be succeeded by Tadeu Marroco.

In early morning trading, BAT shares were down 2.6% at 2,721.50p.

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Thu, 28 Feb 2019 08:40:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/215502/bat-posts-solid-2018-results-but-us-regulation-canada-class-action-appeal-a-drag-215502.html
<![CDATA[News - BAT shares rally, lifted by Piper Jaffray rating upgrade to 'overweight' from ‘neutral’ ]]> https://www.proactiveinvestors.co.uk/companies/news/213532/bat-shares-rally-lifted-by-piper-jaffray-rating-upgrade-to--overweight--from-neutral-213532.html British American Tobacco PLC (LON:BATS) saw its shares rally on Tuesday following recent falls lifted by an upgrade in rating from Piper Jaffray to 'overweight' from ‘neutral’.

The US broker maintained its 3,000p target on the FTSE 100-listed firm, with the shares currently trading at 2,487, up 4.7% on Monday’s close, and said valuation appeared "attractive" at current levels.

READ: British American Tobacco maintains annual earnings guidance

Piper Jaffray trimmed its estimates for the tobacco group on currency factors and to reflect more conservative US assumptions due to risks associated with the Food and Drug Administration’s ban on menthol cigarettes.

However, its analysts said: “While BAT has greater menthol exposure than its peers, risk from a potential ban already appears priced in."

They said they do not expect any operational impact on BAT "for years and years", as the rule-making process itself is lengthy and likely to be followed by "5-10 or more" years of legal challenges.

The analysts also noted that some BAT investors have raised worries at the potential risks to dividend growth, but they do not see it as an issue, noting that BAT's cash flows appeared to be at no risk in any way that would impact its payout.

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Tue, 29 Jan 2019 14:35:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/213532/bat-shares-rally-lifted-by-piper-jaffray-rating-upgrade-to--overweight--from-neutral-213532.html
<![CDATA[News - Stubbed out: Cowen cuts ratings for cigarette makers BAT, Imperial Brands, Altria in global sector review ]]> https://www.proactiveinvestors.co.uk/companies/news/212080/stubbed-out-cowen-cuts-ratings-for-cigarette-makers-bat-imperial-brands-altria-in-global-sector-review-212080.html British American Tobacco plc (LON:BATS) and fellow blue-chip cigarette maker Imperial Brands PLC (LON:IMB) saw their shares go up in smoke on Monday, together with US peer Altria Group Inc. (NYSE:MO) after US broker Cowen pulled back its ratings for all three in a global sector review.

In a note headlined “Tumultuous Times in Tobacco”, the broker’s analysts downgraded their stance on BAT, Imperials Brands and Altria all to ‘market perform’ from ‘outperform’.

READ: £8bn wiped from British American Tobacco’s market cap on reports FDA might ban menthol cigarettes

Cowen’s analysts said the downgrades come as they “grow increasingly cautious on the outlook for combustible cigarettes in the US.”

They pointed out: “Our new market model suggests cigarette industry volumes will likely fall at an 8% CAGR between 2018-2025; with pricing not serving as an adequate offset.”

BAT most disadvantaged

Looking at the individual stocks, the analysts said: “BATS is arguably the most disadvantaged by changes in the US cigarette landscape.”

They pointed out: “Not only is the company the market share leader in menthol (which now faces legitimate regulatory risk), the company has also experienced meaningful market share losses in the ecigarette category for its Vuse offering.”

The analysts said an “offset from more stable volumes internationally should be somewhat helpful” and they also raised their 2019 and 2020 earnings per share (EPS) estimates for BAT on currency factors.

However, they slashed their target price for the Dunhill, Lucky Strike and Camel brands maker to 2,650p per share, down from 4,250p, with the shares trading at 2,476.50p, down 4.1% on Friday’s close.

Imperial Brands most challenged in market terms

On Imperial Brands, the Cowen analysts said: “Of the global tobacco companies under our coverage, IMB has always boasted the most attractive valuation, but has also been the most challenged in terms of market share development.”

They added: “While IMB remains a good cost cutting story, the combination of market share softness in the US, as well as internationally, coupled with increased regulatory risk in the US makes us more cautious on the stock.”

READ: Imperial Brands responds to new US FDA clampdown on vaping products

The analysts lowered their target price for the Winston, JPS and West cigarettes firm to 2,500p from 3,100p after raising their 2019 RPS forecasts but cutting those for 2020, with the stock trading at 2,339.50p, down 4.9%.

Altria growth to be depressed

For Malboro and Benson & Hedges brands group Altria, Cowen’s analysts said: “We are encouraged by MO's investment in JUUL, both as an offset to accelerating cigarette volume declines in the US as well as offering incremental growth from international sales.”

However, they added; “That said, we think EPS growth could be depressed for the next 2 years given the hefty price tag for the 35% stake.”

The analysts cut their 2019 and 2020 EPS estimates for Altria and reduced its target price to $54 from $73. In early New York trading, Altria shares were 3.1% lower at $48.71.

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Mon, 07 Jan 2019 15:48:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/212080/stubbed-out-cowen-cuts-ratings-for-cigarette-makers-bat-imperial-brands-altria-in-global-sector-review-212080.html
<![CDATA[News - FTSE 100: The good, the BATS and the Ocado in 2018 ]]> https://www.proactiveinvestors.co.uk/companies/news/211682/ftse-100-the-good-the-bats-and-the-ocado-in-2018-211682.html The FTSE 100 index lost almost a thousand points (12.7%) in 2018 so there was plenty of competition for the blue-chip stinker of the year.

At the time of writing (21 December), the unwanted accolade was set to go to fags maker British American Tobacco PLC (LON:BATS), which more or less halved in price in 2018, although legacy software group Micro Focus International PLC (LON:MCRO) could yet steal the wooden spoon with a late profit warning or something.

BATS shares have been under pressure since it became clear that vaping was becoming, as the kids like to say, “a thing”.

The maker of Lucky Strike and Dunhill cigarettes has a foothold in the e-cigarettes market but it is nowhere near as dominant there as it is in the tobacco-based products sector.

The company expects to earn around £900mln this year from e-cigarettes and tobacco-heating devices but even that forecast was down from an initial target of £1bn, which provided another stick with which the stock's bears could beat it.

In November, the shares took another shoeing as it was reported that the US Food and Drug Administration (FDA) was considering banning menthol cigarettes, seen as a “gateway” product that can get young smokers hooked on nicotine.

BATS owns Newport, the largest menthol cigarette maker in North America, which contributes as much as 25% of the group’s annual profit.

The curse of Hewlett Packard

Micro Focus, the legacy software group, saw its shares lose 46% of their value in 2018 as it ran into problems integrating the HPE Software business it bought from Hewlett Packard.

In July, the blue-chip software firm's boss, Kevin Loosemore, revealed it was running about "one year behind" plan on the integration of the new business and reiterated that current year revenues will be substantially lower than anticipated at the time of its transformational takeover of HPE Software.

Four months earlier, the company had issued a profit warning as the “transformational takeover” was not providing the sort of transformation shareholders had anticipated. Chief executive duly Chris Hsu fell on his sword.

No escaping sector weakness

Sometimes you are out of fashion and there is little you can do about it.

Silver miner Fresnillo PLC (LON:FRES), down 41% on the year, was laid low by soft precious metal prices and some lower-than-expected ore grades in some of its silver mines, while Taylor Wimpey PLC (LON:TW.), down 34%, was the hardest hit in a house-building sector widely regarded as having moved past the top of the cycle.

Surprisingly, given the zombie state of the British high street, there was only one retailer in the top 10 fallers and in the case of Kingfisher PLC (LON:KGF), down 38%, the fault was largely with the French high street rather than the British one.

READ B&Q owner Kingfisher dragged down by French business once again in first half

The rise of online shopping has been a boon to the packaging sector and this has encouraged packaging companies to invest in new capacity, giving rise to concerns that the industry may suffer from over-capacity in the next decade.

As a result, DS Smith PLC (LON:SMDS) got it in the neck this year, shedding 38%, although sector peer Mondi only lost 16% and trades on a higher price/earnings ratio, signifying that the market was punishing DS Smith for its £1bn cash call to partly fund the acquisition of Spanish rival, Europac.

Online shopping should also have been a boon for Royal Mail PLC (LON:RMG) but parcel delivery is one area where it faces tough competition. Meanwhile, it is still lumbered with the need to maintain the uniform pricing on its letters delivery service and with its pension deficit.

Throw in a disgruntled workforce that seems not to have warmly welcomed its union leaders’ pension and productivity deal with Royal Mail’s handsomely remunerated management and you have a stock – down 38% - that is becoming to FTSE 100 membership what Norwich City football club is to membership of the Premiership.

Always look on the bright side of life

Even in a miserable year such as this one, there are always success stories and this year the big one was Ocado Group PLC (LON:OCDO), once commonly regarded as an online grocer that would inevitably get crushed by the supermarkets but now a company valued for its cutting-edge technology.

The shares were up 92% on the year as the sceptics – I was one of them – were made to eat humble pie (delivered in a 30-minute time slot in mid-afternoon) after the company bagged a deal with US retail giant Kroger this year.

When I say retail giant, I am not kidding; the US supermarket chain generated US$122bn in revenues last year, which makes it potentially a much bigger partnership for Ocado than the one it has with Morrisons or its long-held arrangement with Waitrose.

At one point in 2016, more one than one-in-five of the company’s shares had been sold short – the practice of borrowing shares and selling them in the hope of buying them back cheaper later on. That figure has dropped to less than 3% although doubts still remain whether the company will justify its current £4bn valuation.

Steelmaker Evraz PLC (LON:EVR) trailed in a distant second in the list of Footsie risers, with a 42% rise, its fortunes, as ever, linked to the growth of the Chinese economy.

Recovery stock Pearson PLC (LON:PSON) was the third-best performer, with the publishing group rising 26%, while it was a good year for risk-averse investors to take refuge in those defensive standbys, pharmaceuticals stocks.

Shire PLC (LON:SHP), AstraZeneca PLC (LON:AZN) and GlaxoSmithKline PLC (LON:PLC) all gained around 14/15% on the year.

Another defensive favourite, J. Sainsbury PLC (LON:SBRY), just crept into the top ten with an 11.5% rise.

 

Rank

Company

% change

Company

% change

1

Ocado

+92%

British American Tobacco

-50%

2

Evraz

+42%

Micro Focus International

-46%

3

Pearson

+26%

Fresnillo

-42%

4

Shire

+15%

Standard Life Aberdeen

-42%

5

AstraZeneca

+15%

Royal Mail

-38%

6

GlaxoSmithKline

+14%

Kingfisher

-37%

7

Bunzl

+14%

DS Smith

-37%

8

Experian

+13%

WPP Group

-35%

9

Anglo American

+13%

Taylor Wimpey

-34%

10

J. Sainsbury

+12%

Vodafone

-33%


 

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Tue, 25 Dec 2018 05:34:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/211682/ftse-100-the-good-the-bats-and-the-ocado-in-2018-211682.html
<![CDATA[News - British American Tobacco maintains annual earnings guidance ]]> https://www.proactiveinvestors.co.uk/companies/news/211032/british-american-tobacco-maintains-annual-earnings-guidance-211032.html British American Tobacco (LON:BATS) maintained its full-year earnings guidance on Wednesday and said its deleveraging plans remain on track.

The world’s second-biggest international tobacco company said it still plans to exceed its target for high single-digit growth in adjusted earnings per share for 2018, excluding a currency impact of around 6%.

READ: Jefferies thinks US menthol cig ban is unlikely; reiterates blockbuster £50 price target for BATS

The maker of Lucky Strike cigarettes said its US business was performing well with volumes in line with expectations. US industry volume decline remains in line with historical ranges down 4.4% in the year-to-date and it continues to expect an industry decline of around 4.0-4.5% for 2018.

The company said adjusted revenue and operating profit growth would be weighted toward the second half of the year.

It said its deleveraging remained on track and that at current exchange rates net debt/adjusted EBITDA is expected to be around 3.9x by the end of 2018.

BAT said the potential regulation of menthol in cigarettes in the US should be developed through a comprehensive rule-making process, be based on a thorough review of the science and consider the unintended consequences, in order to withstand judicial review. The company said it was “constructively engaging” regulators and supporting evidence-based regulation

"We remain on track for a strong performance in 2018 - driven by both our combustible and PRRP businesses,” CEO Nicandro Durante said in a statement.

“In the US, we are performing well, with positive pricing and continued value share growth. Our de-leveraging remains on track and we remain committed to a dividend payout ratio of at least 65%. We expect to exceed our high single figure adjusted diluted EPS growth at constant rates of exchange."

BAT added that Lionel Nowell would retire from its board with effect from 12 December 2018.

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Wed, 12 Dec 2018 07:47:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/211032/british-american-tobacco-maintains-annual-earnings-guidance-211032.html
<![CDATA[News - Jefferies thinks US menthol cig ban is unlikely; reiterates blockbuster £50 price target for BATS ]]> https://www.proactiveinvestors.co.uk/companies/news/210211/jefferies-thinks-us-menthol-cig-ban-is-unlikely-reiterates-blockbuster-50-price-target-for-bats-210211.html Shares in British American Tobacco plc (LON:BATS) puffed higher on Thursday after analysts at Jefferies repeated their blockbuster 5,000p price target.

BATS shares have almost halved over the past year, largely on concerns that margins will take a whack as more people switch to e-cigarettes and the like, while US regulators have threatened to take action as it looks to curb rising levels of nicotine addiction in young people.

One of the measures the Food and Drug Administration is looking to bring is a ban on menthol cigarettes, but Jefferies isn’t convinced such a thing will ever happen.

“The market reaction…reflects a view that a rule to ban menthol is happening,” read a note to clients.

“We think the market has got this wrong. First, we think a ban remains unlikely as not supported by enough evidence. Second, if a ban was to come, we think the cumulative lost profit would be minimal due to users staying with a non-menthol variant, or switching into reduced-risk products [RRP].”

READ: £8bn wiped from BATS' value on menthol ban fears

That view contrasts with RBC Capital, which is of the opinion that a ban will come into force by 2025. That is reflected in its 2,700p price target – almost half what Jefferies is looking for.

The Canadian bank reckons BATS is no longer a ‘defensive’ play, with the uncertainties making its future “very opaque”.

“We expect growth in next-generation products (NGPs) to erode the tobacco industry’s historically insurmountable barriers to entry and, by extension, extremely high competitive concentration and profitability,” read its research note on Thursday.

“In addition, the FDA proposal to ban menthol cigarettes in the US will, we estimate, impact group sales and margin by 2025, meaning that in aggregate group EBIT margin will have fallen by around 1,000 basis points by 2030.”

Investors seemed to side with Jefferies though, with shares jumping almost 2% to 2,789p in mid-morning trade.

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Thu, 29 Nov 2018 10:47:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/210211/jefferies-thinks-us-menthol-cig-ban-is-unlikely-reiterates-blockbuster-50-price-target-for-bats-210211.html