Investors will be hoping British American Tobacco (BAT) can show it is continuing to reinvent itself as the loss-making cigarette maker sharpens its focus on newer smoking alternatives.
BAT will give shareholders an update on its trading performance on Tuesday amid major smoking bans being considered in the UK and US.
The maker of Lucky Strike and Dunhill cigarettes revealed in February that it slumped to an annual loss after taking a hit to its US business.
It had been expecting to write down the value of some of its American brands because of declining smoking rates, lower sales amid a wider cost-of-living squeeze, and because of its long-term strategy to shift away from traditional cigarettes.
But, with the tobacco market in continuing decline, it’s down to robust pricing and increasing demand for next generation products, like vapes, to keep financial performance moving in the right direction
Derren Nathan, Hargreaves Lansdown
The FTSE 100-listed company is expecting its total revenues to edge up only fractionally this year, compared with last.
Derren Nathan, head of equity research for Hargreaves Lansdown, said: “British American Tobacco’s full year guidance of low single-digit growth in both revenue and operating profit may seem unambitious.
“But, with the tobacco market in continuing decline, it’s down to robust pricing and increasing demand for next generation products, like vapes, to keep financial performance moving in the right direction.”
The business makes so-called “reduced-risk” products, such as its Vuse vape, Glo e-cigarette, and Velo oral nicotine pouch.
Read MoreSponsoredThe number of vape users hit about 11.5 million in the latest year, partly driven by single-use vapes, the firm revealed.
The newer product category is profitable for BAT and it is targeting making half of its revenues from the non-traditional cigarettes by 2035.
Investors could be looking for more clarity on Tuesday after the company flagged uncertainty around a potential menthol cigarette ban in the US, which make a large proportion of the country’s cigarette market.
The proposal has faced setbacks with government officials recently missing a deadline to make a final ruling.
Meanwhile, it is facing a potential new Bill in the UK which would ban young people smoking cigarettes, vapes and other products.
But a smoking ban will not be enforced before the UK holds a General Election on July 4, meaning it could fall into the hands of a potential new government to put into place.
Labour has previously said it remains committed to the policy.
BAT stressed earlier this year that it was not expecting a financial impact to the UK business of the generational smoking ban and a ban on disposable vapes.
