British American Tobacco (BATS) has maintained its outlook for 2020, including its commitment to a 65 per cent dividend payout ratio. For the first half, consumption trends in developed markets – which constitute three-quarters of group revenues – were “robust”, in a sign that the virus-induced financial crisis has not yet prompted customers to trade down to cheaper products. Cigarette volume share rose by 0.5 percentage points overall.
It follows that revenues were flat against the first six months of 2019. Operating profits climbed by 16.4 per cent to £5.1bn, on an improved margin of 41.5 per cent – but this was flattered by the fact that the prior period had seen a charge pertaining to a Canadian class action.
Group debt sat at £50.5bn at the period-end, up from £45.4bn on 31 December – reflecting bond issuance in recent months, compounded by currency movements. At the same time, net cash from operating activities soared by more than a half to £3.5bn. But this stemmed from the deferral of corporate tax payments in the US to the second half of the year – something that mitigated the inventory increases driven by Covid-19, but which should reverse over the coming months.
Panmure Gordon expects adjusted EPS of 331p for 2020 – down slightly from the broker’s earlier projection of 333p, but up from 324p in 2019.
| BRITISH AMERICAN TOBACCO (BATS) | ||||
| ORD PRICE: | 2,694p | MARKET VALUE: | £ 61.7bn | |
| TOUCH: | 2,693-2,695p | 12-MONTH HIGH: | 3,507p | LOW: 2,382p |
| DIVIDEND YIELD: | 7.9% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 3,032p* | NET DEBT**: | 65% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
| 2019 | 12.2 | 3.87 | 123 | 101.5 |
| 2020 | 12.3 | 4.59 | 151 | 103.4 |
| % change | +1 | +19 | +23 | +2 |
| Ex-div (2nd of 4 payments): | 8 July (pre-results); 3rd of 4 payments trades ex-div on 30 Sep | |||
| Payment (2nd of 4 payments): | 19 Aug; 3rd of 4 payments made on 12 Nov | |||
| *Includes intangible assets of £127m or 5,536p a shareNB: the group recognises interim dividends in the period they are paid. Interim results reflect the fourth quarterly dividend from the declaration made on 28 Feb 2019 of 50.75p, and the first quarterly dividend from the declaration made on 27 Feb of 52.6p per share | ||||
