STILL IN RUSSIA
Thousands of jobs to go at tobacco firm BAT as focus turns to vapesON THE FIRST ANNIVERSARY OF THE RUSSIAN INVASION
WHY ARE THEY STILL IN RUSSIA INQUIRING MINDS WANT TO KNOW
August Graham, PA Business Reporter
Thu, 9 February 2023
The boss behind the Lucky Strike and Dunhill cigarette brands has said that thousands of jobs at the company’s traditional business will be lost in the coming years as the firm focuses on vapes and other new products.
British American Tobacco (BAT) chief Jack Bowles also said that sanctions are making it more difficult to sell the Russian part of the business.
He was speaking as BAT reported a 7.7% rise in revenue to £27.7 billion in 2022. Revenue from its new categories business, which includes vapes and other tobacco alternatives, rose 41% to £2.9 billion.
BAT hopes to reach £5 billion in revenue from the new category unit by 2025. The business also said the new category unit would be profitable next year, ahead of plan.
Revenue from BAT’s new categories business, which includes vapes and other tobacco alternatives, rose 41% to £2.9 billion (Alamy/PA)
But the pivot towards these new forms of technology will also mean fewer jobs for the old side of the business.
Mr Bowles told the PA news agency that thousands of people will lose their jobs at the company within the next few years, but he is also recruiting others for the new categories business.
“We have to adapt our structure as we go along, and we have to make sure that we hire a lot of new capabilities and a lot of new people,” he said.
He added: “In the course of the next two years a few thousand people will have to go because we continue to reorganise and optimise.”
The cigarette-maker said in March 2022, shortly after the Kremlin ordered tanks towards Kyiv, that it would get out of both Russia and Belarus.
But in a report to shareholders on Thursday the company said that – while it is in “advanced discussions” – it had not yet sealed a deal to sell the business.
“There are sanctions in Europe, there are sanctions in the UK, there are sanctions in the US and there are regulations in Russia,” Mr Bowles said.
“All this makes it extremely complicated when you have an establishment which includes factories and a sales force.
“If you’re just a retailer you can move it on the back of an envelope and write off the whole thing.
“When you have the brands, the distribution, the manufacturing and the sanctions from different bodies, then you need to make sure you do things properly.
“We want to exit Russia, it takes time. To give you an idea, all the countries that we went out of in the past few years took up to two years, and they were far less complex than this one. Frankly speaking we’re going at speed.”
Asked if he would give the profits that BAT made in Russia and Belarus in the meantime to charity, Mr Bowles said that those profits would be wiped out by the sale.
August Graham, PA Business Reporter
Thu, 9 February 2023
The boss behind the Lucky Strike and Dunhill cigarette brands has said that thousands of jobs at the company’s traditional business will be lost in the coming years as the firm focuses on vapes and other new products.
British American Tobacco (BAT) chief Jack Bowles also said that sanctions are making it more difficult to sell the Russian part of the business.
He was speaking as BAT reported a 7.7% rise in revenue to £27.7 billion in 2022. Revenue from its new categories business, which includes vapes and other tobacco alternatives, rose 41% to £2.9 billion.
BAT hopes to reach £5 billion in revenue from the new category unit by 2025. The business also said the new category unit would be profitable next year, ahead of plan.
Revenue from BAT’s new categories business, which includes vapes and other tobacco alternatives, rose 41% to £2.9 billion (Alamy/PA)
But the pivot towards these new forms of technology will also mean fewer jobs for the old side of the business.
Mr Bowles told the PA news agency that thousands of people will lose their jobs at the company within the next few years, but he is also recruiting others for the new categories business.
“We have to adapt our structure as we go along, and we have to make sure that we hire a lot of new capabilities and a lot of new people,” he said.
He added: “In the course of the next two years a few thousand people will have to go because we continue to reorganise and optimise.”
The cigarette-maker said in March 2022, shortly after the Kremlin ordered tanks towards Kyiv, that it would get out of both Russia and Belarus.
But in a report to shareholders on Thursday the company said that – while it is in “advanced discussions” – it had not yet sealed a deal to sell the business.
“There are sanctions in Europe, there are sanctions in the UK, there are sanctions in the US and there are regulations in Russia,” Mr Bowles said.
“All this makes it extremely complicated when you have an establishment which includes factories and a sales force.
“If you’re just a retailer you can move it on the back of an envelope and write off the whole thing.
“When you have the brands, the distribution, the manufacturing and the sanctions from different bodies, then you need to make sure you do things properly.
“We want to exit Russia, it takes time. To give you an idea, all the countries that we went out of in the past few years took up to two years, and they were far less complex than this one. Frankly speaking we’re going at speed.”
Asked if he would give the profits that BAT made in Russia and Belarus in the meantime to charity, Mr Bowles said that those profits would be wiped out by the sale.
BAT vaping division set to turn a profit a year ahead of schedule
Thu, 9 February 2023
A man exhaling whilst using a vaping product (Nick Ansell/PA) (PA Archive)
British American Tobacco expects its vaping division to be profitable earlier than previously anticipated, but its share price was down as diluted earnings per share declined.
Total revenue for BAT is set to come to £27.7 billion for 2022, up 7.7% from 2021.
Its “new categories” arm - made up of vapes, tobacco heating products and pouches contributed £2.9 billion of this revenue, which was up by 40.9%.
CEO Jack Bowles said the division was now expected to turn a profit in 2024, one year earlier than previously thought.
“"Our new category business delivered strong volume, revenue and market share growth and has become a significant contributor to the group’s financial delivery,” he said. “In 2022, we invested more than £2 billion in new categories to drive long-term sustainable growth, while making excellent progress in reducing operating losses by 62%.”
Group operating profit also increased slightly, to £10.5 billion.
BAT said a number of one-off charges, including from divesting its Russian operations and the need to set aside money because of a US investigation into alleged historical breaches of sanctions, brought its profits down. Bowles added that it expected the deal to divest its Russian business to an unnamed “joint management-distributor consortium” to close this year.
Adjusted operating profit was in line with expectations at £12.4 billion.
However, BAT shares are down 4.5% so far today to 2,953p, as diluted earnings per share dipped by 1% to 291.9p.
The group also announced a dividend today of 230.9p per share, up by 6% from last year’s dividend. However, finance & transformation director Tadeu Marroco said BAT would “take a pragmatic approach” with capital allocation, and “prioritise strengthening the balance sheet”.
Last week, BAT announced a restructuring of its regional divisions which would include merging Europe with the non-US Americas. A spokesperson told the Standard at the time that the new plan could lead to layoffs, but that no decisions on the matter had been made yet.
Thu, 9 February 2023
A man exhaling whilst using a vaping product (Nick Ansell/PA) (PA Archive)
British American Tobacco expects its vaping division to be profitable earlier than previously anticipated, but its share price was down as diluted earnings per share declined.
Total revenue for BAT is set to come to £27.7 billion for 2022, up 7.7% from 2021.
Its “new categories” arm - made up of vapes, tobacco heating products and pouches contributed £2.9 billion of this revenue, which was up by 40.9%.
CEO Jack Bowles said the division was now expected to turn a profit in 2024, one year earlier than previously thought.
“"Our new category business delivered strong volume, revenue and market share growth and has become a significant contributor to the group’s financial delivery,” he said. “In 2022, we invested more than £2 billion in new categories to drive long-term sustainable growth, while making excellent progress in reducing operating losses by 62%.”
Group operating profit also increased slightly, to £10.5 billion.
BAT said a number of one-off charges, including from divesting its Russian operations and the need to set aside money because of a US investigation into alleged historical breaches of sanctions, brought its profits down. Bowles added that it expected the deal to divest its Russian business to an unnamed “joint management-distributor consortium” to close this year.
Adjusted operating profit was in line with expectations at £12.4 billion.
However, BAT shares are down 4.5% so far today to 2,953p, as diluted earnings per share dipped by 1% to 291.9p.
The group also announced a dividend today of 230.9p per share, up by 6% from last year’s dividend. However, finance & transformation director Tadeu Marroco said BAT would “take a pragmatic approach” with capital allocation, and “prioritise strengthening the balance sheet”.
Last week, BAT announced a restructuring of its regional divisions which would include merging Europe with the non-US Americas. A spokesperson told the Standard at the time that the new plan could lead to layoffs, but that no decisions on the matter had been made yet.
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