Why Cigarette Company British American Tobacco Shares Are Diving Today
Portfolio Pulse from Lekha Gupta
British American Tobacco PLC (NYSE:BTI) shares dropped approximately 9% following a pre-close trading update. The company expects to record a non-cash impairment charge of about £25 billion ($31.50 billion) related to certain U.S. cigarette brands. BAT plans to start amortizing the remaining value of its U.S. combustibles brands from January 2024. Despite challenges in the U.S. market, including macroeconomic pressures and illicit modern disposables, BAT's global volume share in combustibles is flat YTD 2023, with a slight decrease in value share. The company remains on track for 100% operating cash flow conversion in 2023 and aims to be within its targeted leverage range. BAT anticipates organic revenue growth at the lower end of its 3%-5% guidance for 2023 and projects an improvement to 3%-5% revenue growth by 2026, with a goal of 50% revenue from non-combustible products by 2035.
December 06, 2023 | 3:49 pm
News sentiment analysis
Sort by:
Descending
NEGATIVE IMPACT
British American Tobacco PLC shares declined due to a significant non-cash impairment charge and challenges in the U.S. market. The company's financial outlook remains stable with a focus on non-combustible products and expected revenue growth.
The significant impairment charge is a negative signal to investors, reflecting challenges in the U.S. market and potentially leading to a short-term decline in stock price. However, the company's commitment to cash flow conversion and revenue growth, along with its long-term strategy towards non-combustible products, may mitigate some concerns.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 100