British American Tobacco (BAT) saw a 29% revenue increase in its New Categories segment, largely due to higher Vapour revenue from South Africa and New Zealand.
In the tobacco giant’s half-year report for the six months to 30 June 2023, it reported a 4.4% increase in revenue.
According to BAT, this growth was driven by its New Categories segment, which saw a significant revenue boost over the period and is on track to profitability.
The New Categories segment consists of revenue from the company’s Vapour, THP, Modern Oral and Traditional Oral products.
BAT chief executive Tadeu Marroco said that, despite a challenging external environment, he is pleased with the company’s performance in the first half of 2023.
“High inflation and slower global growth are impacting consumers and business,” he said. “Yet our revenue, profit from operations and earnings are all up.”
In particular, he said BAT is making great progress in New Categories.
“Revenues are up by 29%, and we are now close to breakeven, with consumers of Non-Combustible products up by 1.5 million versus FY 2022. I remain confident that New Categories will deliver a positive contribution in 2024.”
“On a constant currency basis – excluding translational foreign exchange – which we believe reflects the operational performance, New Categories increased by 15.0%, driven by growth in revenue from:
- Vapour, driven by increases in South Africa, New Zealand and Indonesia, largely due to the growth of modern disposables;
- THP, mainly due to higher volume in both Japan (up 14.7%) and South Korea (up 10.3%); and
- Modern Oral, due to continued growth in Pakistan and the roll-out in Kenya.”
In the first half of 2023, New Categories’ financial delivery significantly improved, contributing £201 million (R4.59 billion) to group profit.
In particular, the segment was boosted by the growth of Vapour in South Africa, largely due to the growth of modern disposables, the company reported.
The company’s revenue from Vapour was up 35.5% in the period, and the volume increased by 9%.
In the Asia Pacific, Middle East and Africa (APMEA) region, total Vuse consumables volume grew 35.0%, with revenue up 65.5% – or 76.6% on a constant currency basis – driven by South Africa and New Zealand.
This saw the company’s Vapour revenue in the APMEA region grow 76.6% on a constant currency basis.