British American Tobacco has maintained its full-year profit and sales forecasts, as more people are switching to the tobacco company's Vuse vaping and Velo oral nicotine products.
The company said 3.6 million more customers used its 'new categories' products – including e-cigarette, tobacco heating and oral nicotine – in the year to end September, bringing its total non-combustible user base to 17.1 million.
The higher adoption and increased distribution will result in new categories contributing to profit growth for the first time this year, the maker of Lucky Strike and Newport cigarettes said.
'A Pivotal Year'
“2021 is the pivotal year in our transformation journey to build A Better Tomorrow," commented Jack Bowles, BAT chief executive. "“Benefitting from a continued strong New Category performance, which is now a sizeable contributor to group revenue growth, we are making excellent progress towards our £5 billion (€5.88 billion) revenue target by 2025, supported by a clear focus on THP.
“By leveraging our increased scale, New Categories will contribute to profit growth for the first time as their losses start to reduce, a key step on our pathway to profitability by 2025."
Vuse Leads Vaping Market
The company, which was the first tobacco group to get a marketing nod from the U.S. Food and Drug Administration to sell e-cigarettes, said its Vuse e-cigarette products were now the "global leader" in market share in the top five vaping markets in the world.
Market share rose 6.9 percentage points over 2020, so far this year to September, it added.
The FTSE-listed company also said at current valuation it recognises the "clear value" of a buyback, even as it seeks to reduce debt to three times its adjusted earnings before interest, taxes, depreciation and amortization.
“We are accelerating our transformation with continued strong momentum across New Categories and are confident in delivering our 2021 financial guidance," Bowles added.
Last week, rival Philip Morris said that it was also on track to achieve its targets in the tobacco alternatives market.