(Alliance News) - British American Tobacco PLC said Wednesday it has yet to see any harm to sales caused by the spread of the new coronavirus.
Speaking at its Capital Markets Day, being held via webcast, the tobacco giant said Covid-19 is "developing rapidly" but has yet have a material impact on sales.
"We are fortunate that our business is resilient and is supported by a geographically diversified supply chain from both a manufacturing and distribution standpoint," BAT said.
The company has previously stated its New Category sales will struggle in the first half of 2020, and has postponed some product launches despite supply chains in China recovering.
BAT is hoping, however, to make progress on its GBP5 billion New Category revenue target for 2024.
"Although we have seen limited impact to date on consumer demand for cigarettes (outside the Duty Free channel, which is not material), we continue to monitor the situation closely," BAT added.
"At present we are maintaining our expectations for 2020 global industry cigarette and THP volume to be down about 4% and, while year to date US industry volume contraction has been about 1% more benign than last year (YTD to February down about 4%), we retain our full year 2020 US industry volume decline forecast of about 5%, given the rapidly changing environment."
Despite the "global uncertainty", BAT said it is performing well and has achieved close to 60% of the price increases it planned for 2020.
"At this stage, we maintain our guidance for constant currency adjusted revenue growth of 3% to 5%, together with an improvement in operating margin, and are confident of another year of high single figure constant currency adjusted diluted EPS growth," BAT added.
With strong operating cashflow, the tobacco firm is still committed to its 65% dividend pay-out ratio.
Elsewhere, BAT said it will look to save GBP1 billion in efficiencies over the next three years, from an extended simplification programme.
Chief Executive Jack Bowles said: "I am pleased that our organisation fully embraced the priorities I set out in early 2019 and has started to deliver against them. We are now challenging ourselves with a clear purpose to build A Better Tomorrow by reducing the health impact of our business through offering a greater choice of enjoyable and less risky products for our consumers."
"Our ambition is to have 50 million non-combustible product consumers by 2030 and to achieve carbon neutrality by 2030, while bringing forward our existing 2030 environmental targets to 2025," he added.
Shares in BAT were up 0.2% in London on Wednesday at 2,724.50 pence each. In Johannesburg, the shares were up 5.2% at ZAR550.90.
By Paul McGowan; paulmcgowan@alliancenews.com
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British American Tobacco (BATS)