Shares in British American Tobacco PLC held firm against a falling market after its new CEO Tadeu Marroco confirmed he had no plans to rip up the current strategy.
Marroco said: “Put simply, smokers must have access to better choices. This is already a reality for smokers who have made the switch to our reduced-risk product."
“Our strategic aim is to progressively transform our portfolio by actively encouraging adult smokers to switch to less risky products, compared to smoking; a transformation delivering long-term multi-stakeholder value.”
Derren Nathan at Hargreaves Lansdown noted Morocco has taken over the helm at a difficult time.
"He tells us that 2023 is going to be complex. Challenging would perhaps be a better word,“ Nathan said.
“Meanwhile performance in the faster growing New Categories is a little mixed. Compounded with a shrinking tobacco market the company has its work cut out to keep profits moving in positive territory.”
Russ Mould at AJ Bell explained: “Tobacco companies are pinning their hopes on mass take-up of next generation products such as vaping, yet they face considerable pushback from regulators, health campaigners and more”
“Each week there seems to be someone else calling for tougher rules on vaping, in particular, with children’s doctors the latest to say the rules have to change. They imply youth vaping is a serious problem and needs to be stamped out immediately,” he noted.
“British American Tobacco will be no stranger to dealing with these headwinds, but in this modern world it has a responsibility as a good corporate citizen to ensure its products are not harming society.”
Reflecting the concerns highlighted by Mould, children’s doctors are leading calls for an outright ban on disposable vapes to reduce their popularity among young people as the long-term impact on lungs, hearts and brains remains unknown.
The Royal College of Paediatrics and Child Health said the government should ban single-use disposable vapes, which can be bought for just £1.99 and are most popular with young people.
Dr Mike McKean, the RCPH vice-president and a paediatric respiratory consultant, said the college had made a “very carefully considered call.”
“It took decades to understand relationship of cigarette smoking to cancer and respiratory illnesses – my worry is we could be sleepwalking into a similar situation here,” McKean said.
Nathan added: “The company is sticking by its 2023 guidance of 3-5% underlying revenue growth and mid-single figure growth in underlying Earnings Per Share.”
“Today’s release suggests it’s going to need to see quite an uptick in the second half to meet these targets."
Separately, industry rival Philip Morris International Inc (NYSE:PM) (Philip Morris International Inc (NYSE:PM)) re-affirmed its 2023 earnings forecast, expecting results to tick up from the previous year thanks to its smoke-free portfolio.
Presenting at the 2023 Deutsche Bank Global Consumer Conference, Chief Financial Officer Emmanuel Babeau told investors PMI's 2023 diluted earnings per share guidance of between $5.88 and $6.00 remained unchanged from April at then-prevailing exchange rates.
Shares in BAT rose 1.2% to 2,601.50p.