British American Tobacco shares gained the most in nearly four years after it revealed it was looking to dump some of its £15billion stake in India’s largest cigarette firm.
The Lucky Strike and Dunhill maker said it planned to offload a chunk of its 30 per cent holding in ITC.
BAT chief executive Tadeu Marroco said the potential sell-off ‘offers us the opportunity to release and reallocate some capital’.
The company has owned a stake in ITC for over 100 years and the shareholding has been subjected to numerous regulatory restrictions, he added.
The prospect of a sell-off sent the shares up amid hopes that it will free up cash to hand out to investors.
BAT chief exec Tadeu Marroco (pictured) said the potential sell-off ‘offers us the opportunity to release and reallocate some capital’
The stock ended the day up 7.1 per cent, or 165p, at 2484p.
BAT last launched a £2billion share repurchase programme in February 2022 but decided not to renew it last year.
‘This would be a big positive, bringing the all-important share buyback timeline closer for investors,’ said RBC Capital Markets analyst James Edwardes Jones.
Rival Big Tobacco players have been looking to sweeten investors.
London-listed Imperial Brands has an ongoing £1.1billion share buyback scheme, while Altria announced an £800million buyback last week.
BAT’s rally came as it posted a loss of £15.8billion for 2023 against profits of £10.5billion the previous year. It followed a £27.3billion writedown on US cigarette brands.
The company said in December that Camel, Natural American Spirit, Newport and Pall Mall – brands acquired in a £40billion takeover of the cigarette giant Reynolds American in 2017 – are worth far less than anticipated.
Yet the charge was higher than the £25billion hit it originally warned of.
The company blamed this on currency movements. Cigarette firms in general have suffered as consumers shift towards vapes.
Revenues at BAT were £27billion for the year, down 1.3 per cent from the year before.
Its ‘smoke-free’ business, which includes vapes and nicotine pouches, was profitable for the first time, raking in £398million.
Sales of BAT’s vape products rose about 7 per cent in 2023 while nicotine pouch sales climbed by more than a third.
It looked to stub out concerns surrounding the UK’s incoming disposable vape ban, which is aimed at tackling the rise in young people vaping.
Marroco said this would not have a huge impact thanks to his firm’s refillable vape products including Vuse.
‘Because we have a modest share in disposable vapes, we would be in a stronger position, because we are leaders in refillable,’ he said.
Looking ahead, BAT said global tobacco sales are expected to be down 3pc, driven by a weak performance in the US.
