British American Tobacco shares slumped on Thursday as it warned of tougher regulatory headwinds in Australia and Bangladesh after a sizeable writedown in Canada dampened its return to profit.
The maker of Lucky Strike and Dunhill cigarettes posted a net profit of £3.1 billion ($3.9 billion) last year, BAT said in a results statement.
That compared with a loss after tax of £14.4 billion in 2023 following a hit to its US business.
Shares in BAT slid seven percent in midday trading on London’s FTSE 100 benchmark index, which was down 0.6 percent overall.
The latest earnings included a £6.2-billion provision to settle a case in Canada.
BAT is one of several companies involved in a years-long dispute with Canadian provinces and smokers over cigarette harms.
It also warned of tougher tobacco laws in Australia, which has long pursed a proactive anti-smoking policy.
Bangladesh has meanwhile implemented “a substantial increase” in tobacco duties and VAT, the group noted.
“We expect significant regulatory and fiscal headwinds in Bangladesh and Australia to impact our combustibles performance,” chief executive Tadeu Marroco said in the results statement.
In 2012, Australia became the first country to mandate a plain cigarette pack, a policy since copied by many countries.
It intends to further tighten its legislation starting in April, BAT highlighted.
The company said its total revenue fell five percent last year to around £26 billion, with the tobacco group hit by the sale of its business in Russia and Belarus.
BAT, along with other tobacco majors, has been developing its “new categories” — such as electronic cigarettes, heated tobacco, and oral nicotine products — to hedge against struggling cigarette sales.
Revenue for these products grew 2.5 percent last year, and now represent 17.5 percent of total revenue, it said.
The return to profit comes after the company was hit in 2023 by a bigger-than-expected impairment of £27.6 billion, mainly on its US business.
Marroco added Thursday that BAT’s US operations have since been strengthened, despite “a challenging macro-economic backdrop and a growing presence of illicit single-use vapour product”.
In Britain, the Labour government plans to prevent anyone born after January 1, 2009 from legally smoking by gradually raising the age at which tobacco can be bought.
The legislation will also introduce restrictions on vape advertising and sponsorship as well as restricting flavours, displays and the packaging of e-cigarettes to reduce their appeal to children and young people.
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