British American Tobacco (BATS), in common with several industry peers, saw its shares jump after the US Food and Drug Administration (FDA) delayed plans to reduce nicotine levels in cigarettes to levels deemed non-addictive.
BATS made 41 per cent of its revenues from the US in the first six months of 2019, the largest contribution from any locale by far. A drop in consumer disposable income, together with a rise in 'vaping' numbers, helped to push the number of cigarettes sold down 5.4 per cent in the first half of the year, raising questions over the elasticity of demand for combustible product lines. The fall in volumes, however, did not stop the group from increasing profits by 11.2 per cent through price increases.
In spite of FDA delay, Imperial Brands (IMB) did not enjoy the same share price boost as its rival. Though Imperial makes a smaller share of its revenues - 29 per cent - from the Americas, it has been less effective in seizing market share, adding 10 basis points in the year to September, while BATS added 30 basis points in the six months to June.
