British American Tobacco (BAT), the world's second largest tobacco company, warned on Wednesday against the prospect of a more pronounced decline in cigarette sales worldwide, mainly because of the decline in demand in the United States, its main market, which makes the stock fall on the London Stock Exchange.
This warning highlights the challenges facing the tobacco industry as smokers, particularly in the United States, turn to less harmful alternatives such as electronic cigarettes and vaping products.
British American Tobacco (BAT), owner of the Lucky Strike and Dunhill brands, said he expects global industry volumes to fall by about 3,5% this year, while he previously estimated the decline at 3%. Yesterday, the title lost about 5% in the afternoon, red flag of the London index FTSE 100 (-0,58%).
"There are some profit taking but the title still suffers from wider changes in the sector", said David Madden, analyst at CMC Markets. "The group will need to reinforce its vaping sales in order to dispel the more general negative sentiment."
BAT said it would invest in what it calls its "new category", whose revenue growth is approaching its annual target range, which analysts have interpreted as a sign of some weakness in this activity.
CHINA NATIONAL TOBACCO IS IMPOSING ITS ENTRANCE IN STOCK!
The international branch of the Chinese tobacco giant China National Tobacco took more than 10% when listing in Hong Kong. China is by far the largest cigarette producer in the world, with 2.368 billion units a year. The sector is in turmoil with the rise of electronic cigarettes.