04 June 2024
If you are covering BAT’s first half results, please find a comment below from Chris Beckett, head of equity research at Quilter Cheviot:
"BAT’s H1 pre-close update was slightly disappointing. The results were in line with management expectations, but the low single-digit decline in revenue and profits was a bit more pronounced than what the market anticipated.
"On the positive side, the company’s reiteration of full-year guidance is a welcome sign, indicating an expected acceleration in H2. The commentary around cash flow, deleveraging, and the share buy-back is particularly encouraging, with expectations set for a ‘sustainable buy-back’ to continue beyond the end of 2025.
"However, there are challenges to be mindful of. The US conventional market has been described as ‘challenging’ due to macro factors, and there’s a noticeable loss of market share in the US vape segment to ‘illicit’ single-use alternatives.
"Despite these hurdles, the valuation of BAT remains very low, with an attractively high yield. This suggests that, while there are short-term challenges, the long-term value proposition remains strong for investors."
