British American Tobacco said that it expects to complete the sale of its Russian business to its local partner in 2023, as it exits Russia — where it controlled almost a quarter of the market before the country invaded Ukraine.
The Lucky Strike cigarette maker, which had said in March 2022 that it would exit Russia after Moscow's invasion, is also set to transfer its Belarusian unit this year.
The company reported its full-year adjusted profit from operations at £12.4 billion (€13.99 billion), a jump of 11%, driven by strong demand for its e-cigarettes and oral nicotine products.
New Category Division
It said that it was confident of achieving £5 billion (€5.64 billion) in revenue from its 'New Category' division by 2025, and expects profitability from the division by next year.
It invested more than £2 billion (€2.26 billion) in this division over the course of the last year.
'Accelerate Our Transformation'
According to Jack Bowles, chief executive, the past year has demonstrated BAT's ability to "successfully navigate an increasingly challenging macro-economic environment", while also returning £6.9 billion (€7.78 billion) to shareholders.
"Looking forward, while we expect the macro-economic environment to remain challenging, we will continue to deliver and further accelerate our transformation," he said.
"We will leverage our well-established multi-category brand portfolio, our new regional structure to enable even greater collaboration and accelerated decision-making and our new market archetype model to guide our strategic choices and resource allocation to further enhance returns."
According to Roberto Rivero, Market Analyst at Admirals, "In a year marked by challenging economic conditions, British American Tobacco have seen both revenue and profit increase.
"Whilst smoking is in long-term decline, due to the addictive nature of the product, cigarette manufacturers command a high level of pricing power, allowing them to raise prices to offset falling consumption.
"Shareholders will be particularly encouraged by continued strong revenue growth from non-cigarette sales. British American now expect that this division will be profitable by 2024 – a year earlier than previously anticipated. As smoking continues to decline, revenue from this division will surely become increasingly important for the company."