British American Tobacco has said that it took a £957 million (€1.13 billion) impairment charge related to the transfer of its Russian business, pushing half-year earnings of the cigarette maker 25% lower.
The London-based firm, which also makes Camel and Dunhill cigarettes and controlled almost a quarter of the Russian market, said in June it was in advanced talks with its distributor in the country to sell the business.
No agreement to transfer the shares has been entered into, BAT said.
Profit Decline
It reported a 25% drop in profit from operations on a reported basis to £3.68 billion (€4.37 billion) for the six months to June 30 as a result of the charge.
BAT expects global tobacco industry volume to be down about 3%, partly because of the Russia-Ukraine crisis.
'While we are not immune to the current macro environment, we are confident in our full-year guidance, irrespective of the timing of the transfer of our Russian business,' the company said in a statement.
Higher Prices
Its first-half revenue beat expectations, rising 5.7% to £12.87 billion (€15.29 billion), helped by higher prices and steady demand for its vaping and oral nicotine products.
Adjusted operating margin of 43.9%, came in above company-compiled estimates of 43.5%.
“I am very proud that our continued New Categories growth momentum is driving Faster Transformation, with revenue growth of 45% in the first half of 2022, on top of 51% growth in FY2021," commented chief executive Jack Bowles. "We are delivering both strong operational performance and transforming the business."
Commenting on the remainder of the year, he added, “With this strong start to the year, I am confident in achieving our full year guidance."
Shares of the Vuse vape pods-maker were up 0.7% in early trading.
News by Reuters, additional reporting by ESM. For more A-Brands news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.
