British American Tobacco PLC (LON:BATS) has reported constant currency revenue growth above its previous forecasts despite what it said was the “unprecedented impact of the global pandemic” on global life.
In a letter to shareholders at its AGM on Wednesday, the outgoing chairman of the Pall Mall and Lucky Strike maker Richard Burrows said the firm had delivered revenue growth of 3.3% in 2020, above its guidance range of between 1-3%, adding that adjusted profit from operations rose 4.8%.
Burrows noted that £1.4bn of the company’s revenue in the year had come from its reduced-risk, new category products, which include its vapour and tobacco heating brands, representing growth of 15%. It added that it was on track for New Category products to hit £5bn by 2025.
The firm also accelerated the consumer adoption of non-combustible products, highlighting “strong market share gains, consumer acquisition and revenue growth” for New Categories in 2020.
Looking ahead, despite the uncertainty surrounding the ongoing effects of the pandemic, Burrows said the business is “performing well” and reiterated its revenue growth target of 3-5% for 2021 as well as “mid-single figure” adjusted earnings per share (EPS) growth.
He also confirmed the group’s target of a 65% dividend pay-out ratio and growth in sterling terms.
“During 2020, the strength and agility of our business, combined with the professionalism and resilience of our global teams and partners, enabled BAT to continue delivering a strong operational performance”, Burrows said.
“Post [coronavirus], we remain confident in our guidance of 3-5% revenue and high single-figure adjusted diluted EPS growth at constant currency”, he added.
Shares in BAT were up 0.28% at 2,705p in early deals on Wednesday.