(Reuters) - British American Tobacco (BAT) (BATS.L) cut its annual adjusted profit and revenue forecasts on Tuesday, pointing to a worsening outlook for an industry that had previously reported little impact from the coronavirus pandemic on sales and operations.
Shares in the world’s second largest cigarette maker fell almost 4% after it lowered revenue and profit growth estimates for this year by a couple of percentage points each.
It also pushed back its target for reaching 5 billion pounds ($6.3 billion) in sales from new generation products like e-cigarettes to 2025 from 2023-2024.
The company said just six weeks ago the pandemic was having little impact on consumer demand, but CEO Jack Bowles told a conference call that earlier numbers had covered periods when many of its markets were still in the early stages of lockdowns.
Big developing markets including South Africa, where tobacco sales have been banned since March, have extended restrictions, while curbs have also continued on bars in countries including Vietnam.
Marlboro maker Altria (MO.N) pulled its forecast for the current financial year in April, but along with Gauloises maker Imperial Brands (IMB.L) has so far given little guidance on the impact of the lockdowns on demand for the rest of the year.
BAT said it now expected adjusted revenue growth of 1-3% this year, instead of 3-5%, while earnings per share are seen up by a mid-single digit rather than high-single digit percentage.
But the company said it would not adjust its dividend policy of paying out 65% of profit, in contrast with Imperial Brands which cut its annual dividend by a third.
“All things considered British American Tobacco has been doing relatively well against a very difficult backdrop,” said Russ Mould, investment director at AJ Bell.
“Its sales have generally held up and dividends continue to be paid.”
Reporting by Siddharth Cavale in Bengaluru; Editing by Edmund Blair and Mark Potter