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British American Tobacco's new boss faces first hurdle
Published Jun 02, 2023 11:47
© Reuters. British American Tobacco's new boss faces first hurdle
Proactive Investors - British American Tobacco PLC (BAT) (LON:BATS) investors will get their first look at life under Tadeu Marroco when the tobacco group provide first-half results on Tuesday.
The firm’s share price has lost close to a quarter of its value in the year-to-date as the company battles with regulatory tightening on smoking, including the potential banning of menthol.
Investment group AJ Bell analysts said: “Strategically, analysts and shareholders will look for comment on the prospect of new legislation in the USA where the FDA continues to investigate menthol and flavoured cigarettes.”
The aim is clear for BAT, and many of its rivals, and that is to transition the company into selling a new generation of products.
Next-generation products (NGP) reference so-called ‘safer’ options like oral nicotine pouches, vapes and heated tobacco.
The UK company’s board are confident that Marroco is the man to make this transition seamless, telling analysts at Citi that he has experience with culture change and keeping focused on execution.
However, AJ Bell notes that “it is not a pretty picture” for the new boss as he is tasked with “generating cash, paying fat dividends, decreasing borrowings and in time perhaps restarting share buybacks.”
For Marroco to impress he will need to beat or match the guidance set by his predecessor, Jack Bowles.
Revenues are expected to jump by 5% to £29.1bln in the first half, according to analysts.
Additionally, Marroco will need to grapple with debt reduction after the group finished 2022 with net debt of £39.1bln.
Shares in BAT opened at 2557p on Friday.
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