Value of U.S. cigarette brands written down by $34 billion
By Steve Goldstein
British American Tobacco on Thursday said it was taking a GBP27.3 billion ($34.5 billion) writedown on the value of its U.S. cigarette brands.
The cigarette maker had previously said it was going to take a big write-down, which it estimated in December would be around GBP25 billion.
According to data from Calcbench, there hasn't been a writedown this large by a U.S.-listed company since AOL's $35.6 billion write-off in 2014.
BAT is writing down the value of Newport over 20 years, and Camel, Natural American Spirit and Pall Mall over 30 years, in addition to an impairment of the goodwill from the 2017 acquisition of Reynolds American.
The cigarette market prior to COVID was dropping by about 5% to 5.5% per year, was fairly steady during the worst of the pandemic, and then saw industry volumes collapse by 10.6% in 2022, BAT said.
The company more broadly is shifting to smokeless products, where it aims to get 50% of its revenue by 2035.
On an adjusted basis, it said its profit rose by 3.1% to GBP12.46 billion on 1.6% revenue growth to GBP27.28 billion last year. It said its new categories portfolio turned profitable two years ahead of target, and accounted for GBP398 million of profits.
BAT stock (UK:BATS) (BTI) rallied 8% in London trade.
Though it didn't commit to a stock buyback, the company said it will evaluate opportunities to return cash once leverage reaches the middle of its desired range, and it said it will consider disposals and "non-strategic market exits." Analysts at JPMorgan said that's a sign it may sell at least some of its stake in ITC (IN:500875), and shares in the Indian conglomerate fell.
-Steve Goldstein
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
02-08-24 1110ET
Copyright (c) 2024 Dow Jones & Company, Inc.-
These Stocks Are (Still) Powering the Bull Market
-
5 Undervalued Energy Stocks to Play the AI Data Center Demand Boom
-
After Earnings, Is Lowe’s Stock a Buy, Sell, or Fairly Valued?
-
5 Stocks With the Largest Fair Value Estimate Cuts After Q1 Earnings
-
10 Stocks With the Largest Fair Value Estimate Increases After Q1 Earnings
-
Markets Brief: Inflation Back in the Spotlight
-
AI Is Booming, but Consumer Spending Is Slowing. Which Will Prevail in the Stock Market?
-
What’s Happening In the Markets This Week
-
3 Dividend Stocks for June 2024
-
After Earnings, Is Alibaba Stock a Buy, Sell, or Fairly Valued?
-
MongoDB Earnings: Slashing Valuation as Execution and Macro to Blame for Lower Guidance
-
Marvell Earnings: We Raise Our Medium-Term AI Forecast and Bring Our Valuation Up to $75
-
Zscaler Earnings: Impressive Traction in Emerging Products Drives Sales Growth for the Quarter
-
Dell Earnings: Raising Valuation on Strong AI, but the Stock Remains Severely Overvalued
-
After Earnings, Is Nvidia Stock a Buy, Sell, or Fairly Valued?
-
The 10 Best Companies to Invest in Now