British American Tobacco: 2024 Results Punctured Post-Election Euphoria
Company Update (BATS LN) (Buy): BAT fell 9.1% after supposedly “in line” results, as investors are reminded of the reality facing its businesses.
Highlights
Revenues, profits fell in “real” currencies; U.S. $ profits fell 1st time.
H2 better than H1, but U.S. profits fell again with illicit e-cigs out of control.
BAT lost share in Heated Tobacco; U.S. Oral revenues grew just 1.6%.
Op. profit to grow 1.5-2.5% organically in 2025 as EM issues return.
At 3,084.0p, shares have a 9.0x P/E and a 7.8% Dividend Yield.
Introduction
We review British American Tobacco ("BAT") after the release of full 2024 results on Thursday (February 13). BAT shares in London fell 9.1% in the subsequent two days, which means they are down 7.9% in Pounds from 5 years ago:
BAT Share Price Performance (Last 5 Years)
Source: Google Finance (15-Feb-25).
(In U.S. Dollars, BAT’s American Depository Receipts have fallen by 10.8% price over the past 5 years.)
We held BAT in our “Select 15” model portfolio between September 2023 and January 2025, realizing a total profit of 26% (19.0% annualized). We originally upgraded our rating on BAT to Buy in March 2020.
We believe BAT’s share price fell sharply after results, even though headlines were already released in December, because they showed investors how structural headwinds against BAT’s businesses continue to impact its earnings.
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