(Alliance News) - British American Tobacco on Wednesday reported an underwhelming first-half performance as the London-based cigarette maker shifts its focus away from conventional smoking products.
Pretax profit in the first half of the year fell 4.6% to GBP4.38 billion from GBP4.59 billion a year prior. Other operating expenses increased 0.9% to GBP3.41 billion from GBP3.38 billion.
Revenue dipped 0.7% to GBP12.18 billion from GBP12.27 billion.
Chief Executive Jack Bowles said that rapid growth in New Categories is driving "significant scale benefits".
New Categories includes three product offerings: vapour products under the Vuse brand; oral products under Velo; and tobacco heating products under Glo.
Bowles said: "This has been an exciting period of growth in New Categories, with New Category constant currency revenue up by 50% in the first half. We added 2.6 million consumers, our highest ever increase, to our non-combustible product consumer base, to reach 16.1 million. This demonstrates our accelerating transformation driven by our multi-category portfolio, with continued key market share gains in all three New Categories.
"We are building strong, global brands of the future with Vuse, Velo and glo. These are underpinned by industry leading multi-category consumer insights and science, with increasing digitalisation."
BAT will make its quarterly interim dividend payment of 53.9 pence per share in August, part of its previously announced 215.6p payout for 2021 - which is up from 210.4p last year - which will be paid in four equal instalments.
Looking ahead, BAT said it is on track to make its full year guidance, which includes mid-single figure constant currency adjusted earnings per share growth. Last year's EPS came in at 280.0p.
"We remain committed to our 65% dividend pay-out ratio and dividend growth," BAT said.
Shares in BAT were marginally higher at ZAR568.75 each in Johannesburg on Wednesday morning, and were down 0.1% to 2,767.48p each in London.
By Greg Roxburgh; gregroxburgh@alliancenews.com
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British American Tobacco (BATS)