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British American Tobacco (BATS.L) on Wednesday said that revenue growth in its current financial year would be dented by a recent slowdown in the US vaping market.
In recent months, US health authorities have said that more than 2,000 people have been affected by lung illnesses related to vaping, while there have been 47 deaths linked to the use of vaping products.
The spate of issues have led to bans in some states and a strengthening of regulations.
The company said on Wednesday that revenue growth in its new category segment would come in at the lower end of its forecasts, which it said was reflective of the slowdown.
It had previously forecasted that revenue growth would come in at the middle of this range.
Recently appointed CEO Jack Bowles said that the company believed “the issues around vaping in the US should lead to a better and stronger regulatory environment in which we are well-placed to succeed.”
“We expect to deliver a strong performance in 2019, building on the good progress we made in the first half. Our focus on our global strategic brands is delivering share gains and strong price mix in combustibles, both globally and in the US,” he said.
The company’s combustibles segment includes cigarette brands such as Camel and Lucky Strike.
Overall, the company said that revenue growth would come in at the upper half of its 3% to 5% long-term forecast range, largely due to gains in this combustibles segment.
“The company seems to be doing a good job of managing its portfolio of more traditional products for now, hence overall growth coming in towards the top end of guidance in terms of revenue and profit, but long-term trends show demand for cigarettes is running out of puff,” said Russ Mould, investment director at AJ Bell, in a note.