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.
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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.