British American Tobacco sees 2019 profit growth in face of tighter regulations

FILE PHOTO: A general view shows the British American Tobacco offices in London, Britain October 21, 2016. REUTERS/Stefan Wermuth

(Reuters) - British American Tobacco Plc expects another year of good earnings growth in 2019, despite concerns of tighter regulations in the U.S., Chairman Richard Burrows said at the company’s annual general meeting on Thursday.

The world’s second-largest tobacco company, in February, forecast “another year of high single figure adjusted constant currency earnings growth” for 2019 and noted a board proposal to increase its dividend by 4 percent.

The maker of Lucky Strike and Dunhill cigarettes had reported higher full-year adjusted sales and profit, boosted by cigarette market share gains and higher sales of vaping devices.

“While our business is continuing to perform very well we are very conscious that investor sentiment over the last year has been negatively impacted by concerns over possible regulation in the U.S. and competitor dynamics in new categories resulting in a sharp fall in our share price,” Burrows said.

“I am, however, confident that the business is in good shape and that the causes of these concerns in fact present significant opportunities for future growth,” Burrows added.

The changes, which could include a ban on menthol cigarettes the company sells under the Newport brand, have contributed to the share price losing around half its value since May 2017.

British American Tobacco has also previously set a medium-term target for revenue from “new category” products, including e-cigarettes and tobacco heating devices, to grow five-fold to 5 billion pounds ($6.64 billion) by 2023/2024.

Reporting by Justin George Varghese in Bengaluru; Editing by Saumyadeb Chakrabarty and Shounak Dasgupta