FILE PHOTO: A logo is seen at the British American Tobacco offices in London, Britain October 21, 2016. REUTERS/Stefan Wermuth
(Reuters) – British American Tobacco (BATS.L) said on Thursday it was maintaining its guidance of high single figure earnings per share growth for 2020 while expecting some impact on volume and revenue growth in the second-quarter due to the coronavirus.
The world’s No. 2 tobacco company expects 2020 constant currency adjusted revenue growth around the low end of the 3% to 5% range and will continue with its dividend pay-out ratio of 65% of adjusted diluted EPS and growth, it said.
Tobacco and alcohol companies historically do well during times of upheaval in the market, such as the one caused by the rapid spread of coronavirus around the world.
The maker of Lucky Strike and Dunhill cigarettes said the impact from the coronavirus is difficult to predict and together with some delayed launches in its new categories business, results are expected to be weighted towards the second half.
It now expects global industry cigarette and tobacco heating product volume to decline to around 5%, compared to 4% earlier, but maintained its forecast for a 5% drop in the United States.
“Most of our factories are open and are currently operating at full capacity, and we have built up an average stock of around 2 months of finished goods,” BAT said.
The company said it has not laid off any employees or furloughed any staff due to the pandemic.
BAT said it has seen limited impact on consumer demand, pricing or consumers’ ability to access products, but added that sales in global travel retail, which represents less than 1% of its sales, have been significantly impacted.
Reporting by Tanishaa Nadkar in Bengaluru; editing by Patrick Graham and Sriraj Kalluvila