British American Tobacco said 2021 was a “pivotal year” in its transformation into non-tobacco products, as its New Categories business saw soaring revenue growth and narrowing losses.
The company also announced that it will return £2bn to its shareholders through a share buyback in 2022.
Group revenue came in at £25.68bn in the year to 31 December 2021, a rise of 6.9% on the previous year at constant currencies, driven by good cigarette pricing and revenue growth in New Categories.
Adjusted profits from operations rose by 5.2% to £11.9bn, while adjusted earnings per share increased by 6.6% to 329p, in line with guidance.
BAT forecast constant currency revenue growth of 3%-5% for 2022 and EPS growth in the high single digits, weighted to the second half of the year.
The New Categories business saw robust revenue growth of 51% to £2.17bn last year, with losses shrinking by 9%.
Non-combustible products recorded its strongest growth to date with consumers rising by 4.8mln to 18.3mln. These products now account for 12% of group revenues, up from 4% in 2017.
Revenue surged by 59% in Vape and by 41% in Modern Oral.
BAT forecast that the strong performance in New Categories will continue with further revenue growth and narrowing losses in the current year.
It said it is on track to achieve its targets of £5bn of revenue and profitability in New Categories by 2025 and 50mln consumers of non-combustible products by 2030.
Cigarette volume was broadly flat last year, while cigarette volume share fell by 10 basis points, although emerging markets are now beginning to recover from the impact of COVID-19, BAT said.
It forecast a 2.5% decline in global tobacco industry volume for 2022.
"2021 has been a pivotal year in our transformation journey to build 'A Better Tomorrow',” said chief executive Jack Bowles.
“We continued to make excellent progress on our strategic commitments while delivering value to all our stakeholders. It is thanks to the resilience of our people and partnerships that we are continuing to capitalise on the opportunities that are transforming our industry.”
BAT said it generated £10bn of net cash from operating activities in 2021 and is on track generate around £40bn of free cash flow before dividends over the next five years.