Why British American Tobacco Shares Are Surging Today

British American Tobacco PLC BTI shares are surging today after it reported preliminary 2023 results.

The company reported a revenue decline of 1.3%, with organic growth of 3.1% (at constant rates), led by New Categories organic revenue increase of 21.0% (at constant rates) and strong pricing.

Total Combustibles organic revenue rose 0.6% (at constant rates), with organic price/mix of +6.1% offset by weak volume and geographic mix, mainly as the macroeconomic pressures in the U.S. impacted the premium segment.

New Categories segment revenue rose 15.6% Y/Y to £3.35 billion and witnessed profitability in 2023 (at a category contribution level), delivering a £398 million increase to total profit (at constant currencies).

New Categories segment was driven by Vuse and Velo, with revenue from Non-Combustibles now accounting for 16.5% of revenue (+170 bps Y/Y).

Adjusted operating margin expanded 60bps Y/Y to 45.7%, and adjusted Adjusted EPS rose 4.0% Y/Y to £375.6p in the quarter.

The company stated that it is reviewing its stake in India’s ITC and looking forward to monetizing some of its shareholdings.

British American Tobacco expects low-single-digits organic revenue growth and organic adjusted profit growth in 2024.

Also, the company projects that the global tobacco industry volume will be down around 3%, mainly due to the U.S. and Indonesia.

Tadeu Marroco, Chief Executive, said, “We are investing to strengthen our U.S. business, accelerate innovation momentum, and enhance capabilities that support our strategic delivery. We expect these investments, together with the U.S. macroeconomic pressures, will impact 2024. Thereafter, we will progressively build to deliver 3-5% organic revenue, and mid-single digit adjusted organic profit from operations growth by 2026 on a constant currency basis.”

Also Read: Altria Vs. British American Tobacco: Which Stock Is Smoking Hot Right Now

Price Action: BTI shares are up 6.56% at $31.34 on the last check Thursday.

Photo via Wikimedia Commons