British American Tobacco boosts revenue view on smaller pandemic impact

(Reuters) – Lucky Strike-maker British American Tobacco (LON:BATS) on Wednesday raised its revenue forecast for 2020 to the upper end of its prior expectations, thanks to a smaller-than-feared hit to cigarette demand from the COVID-19 pandemic.

The company said the sales impact from the health crisis would be about 2.5%, down from the 3% it had expected earlier.

The tobacco industry has weathered the pandemic relatively well as lockdowns and travel curbs often allowed for more time to smoke, more money to spend on cigarettes and fewer opportunities to smuggle tobacco.

Other big tobacco firms, including Philip Morris (NYSE:PM) International, Japan Tobacco Inc, Imperial Brands (LON:IMB) and Swedish Match, have also raised their 2020 forecasts.

The world’s second-biggest cigarette maker, with brands like Dunhill and Rothmans, expects adjusted revenue growth on a constant currency basis to be at the upper end of its previous forecast of 1% to 3% in 2020.

In the United States, BAT’s biggest market, it expects industry volume to be largely flat. The company had in July revised its U.S. industry volume forecast to be down 2.5% this year, from down 4% earlier.

The company, which also owns vapour product brand vype, maintained its annual growth forecast for adjusted earnings per share at mid-single-digit.