British American Tobacco plc (LON:BATS) has said it expects revenues from its "next generation products" (NGP) to double to over £1bn next year, on the day a UK parliamentary committee said it will hold an inquiry to establish the health and economic impact of electronic cigarettes.
In a statement released ahead of a Capital Markets Day presentation on Wednesday, BAT - the world's biggest international tobacco company - said the products, which include e-cigarettes and devices that heat tobacco without burning it, should exceed revenue of £5bn by 2022.
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The FTSE 100-listed group added that the business, though still small compared with its traditional cigarette business, should break even by the end of 2018 and deliver "substantial profit" by 2022.
Nicandro Durante, BAT’s chief executive, said: “Our NGP business has real momentum and our confidence is reflected in the financial objectives we have set out."
Relatively lenient regulatory approach
The UK’s e-cigarette market has grown to £1.1bn, according to research from Euromonitor, helped by a relatively lenient regulatory approach.
But the UK Parliament’s Science and Technology Committee said it is to launch an inquiry that will seek to address gaps in the understanding of e-cigarettes and assess the suitability of current regulations for the devices.
The Committee said it will accept written submissions by December 8.
BAT’s business continues to perform well
Looking at its overall tobacco business, BAT said that, as stated in its Half-Year Report, “the pricing environment in a number of our markets has been more difficult, notably in Russia, although recent developments are more encouraging.”
But the group added: “The business continues to perform well and we remain confident of another good year of earnings growth at constant currency.”