British American Tobacco helped by higher prices as volumes drop

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British American Tobacco PLC (LON:BATS) shrugged off the disruption caused by COVID-19 in 2020 as higher prices offset lower volumes while newer products sold well.

The FTSE 100 member said cigarette volumes dropped 4.6% over the year to end-December with revenues down 1.1%, but growth in newer areas such as vaping and pouches kept group sales flat at £25.7bn.

New categories revenues rose by 15% overall and accelerated in the second half, said the tobacco giant, but cigarettes and tobacco accounted for almost 90% of turnover.

Profits for the year to end-December rose 10% to £8.7bn helped by £660mln of cost savings.

BATS said it added 3mln customers in its non-cigarettes arm to make 13.5mln in total and is on track to meet its target of 50mln by 2020.

Jack Bowles, chief executive, said it had raised its investment in new categories by £426mln during the year and was now seeing ‘excellent momentum’ here with ‘accelerating volume and value share gains’.

For 2021, BATS added it expects to see constant currency revenue growth of 3-5% with underlying earnings growth of mid-single figures due to COVID-19.

The dividend for the year rises by 2.5% to 215.6p.

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