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British American Tobacco Results

Practical discussions about equity High-Yield Portfolios (HYP) for income
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idpickering
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British American Tobacco Results

#204464

Postby idpickering » February 28th, 2019, 7:10 am

HIGHLIGHTS
 The Group’s results benefitted from the full year effect of the RAI acquisition, which included certain accounting impacts related to the acquisition that affected the prior period. On a reported basis: • Revenue increased 25%, with revenue from the Strategic Portfolio higher by 49%;
• Volume from cigarettes and THP grew 3.3%;
• Profit from operations was up 45%;
• Operating margin increased over 500 bps to 38.0%; and
• Cash conversion of 111%.

 On a representative basis (as if BAT had owned RAI and the other acquisitions, completed in 2017, from 1 January 2017, and defined on page 3 of the full announcement): • Total cigarette and THP volume declined 3.5% to 708 billion. In the key markets2 volume was down 2.7%, outperforming the industry which was estimated to be down 3.4%*, leading to a 40 bps increase in market share;
• Strategic cigarette and THP volume grew 5.8%, led by a 217% increase in THP consumables to 7 billion sticks, as well as growth of Natural American Spirit, Rothmans and Pall Mall;
• Adjusted revenue, at constant rates, increased by 3.5%, driven by robust cigarette price mix (6%) and growth in THP and vapour revenue of 95% to £901 million at constant rates of exchange;
• Adjusted revenue from the Strategic Portfolio (defined on page 3 of the full announcement) was up 8.5% on a constant rate basis, driven by: • a 5.7% growth in revenue from the strategic combustible brands;
• a near doubling of adjusted revenue from NGP to £901 million, at constant rates, with THP (up over 180% to £576 million) and vapour (26% higher at £325 million); and
• an increase of over 11% in revenue from oral to £952 million.

• Adjusted profit from operations grew 4.0% at constant rates of exchange as the adjusted revenue growth and continued drive for efficiency gains more than offset the significant investment in PRRP as the Group continues to develop this category until it matures to break-even and profitability. Since the acquisition, the Group has realised over US$300 million of savings from RAI on an annualised basis;
• Adjusted operating margin, at current rates, was 40 bps higher at 42.6%, as the investment in the development and roll out of PRRP was more than offset by good pricing and cost control; and
• Operating cash flow conversion of 113% (2017: 79%). Normalising for the timing of the MSA payment, brought forward to 2017, the operating cash conversion was 100% (2017: 97%), demonstrating the continuing strong cash generation while investing in the New Categories.

 Adjusted net debt3 to adjusted EBITDA was 4.0x (from 5.3x in 2017) but would have been 3.6x on a constant currency basis. This reduction reflects the Group’s commitment to deleveraging;
 Basic earnings per share declined 86%, with diluted earnings per share 86% lower, as the prior year was affected by a one-off gain related to the acquisition of RAI of £23.3 billion and by a £9.6 billion deferred tax credit due to the US tax reforms, both of which do not repeat in 2018;
 Adjusted diluted earnings per share at constant rates of exchange rose 11.8% as the Group’s growth in operating performance and lower underlying effective tax rate (mainly due to the US Federal tax reform in 2017) more than offset an increase in net finance costs, due to the higher borrowings following the acquisition of RAI and an increase in investment in PRRPs; and
 Dividend per share increases 4.0% to 203.0p, payable in four quarterly dividend payments of 50.75p per share.




https://www.bat.com/group/sites/UK__9D9 ... e/DOB9RNMZ

idpickering
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Re: British American Tobacco Results

#204467

Postby idpickering » February 28th, 2019, 7:18 am

Dividend payment timetable here;

Event

Payment
Number 1 8 May 2019

Payment
Number 2 8 August 2019

Payment
Number 3 14 November 2019

Payment
Number 4 6 February 2020

https://www.bat.com/group/sites/uk__9d9 ... e/DOALSC3V

Dod101
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Re: British American Tobacco Results

#204468

Postby Dod101 » February 28th, 2019, 7:19 am

Thanks Ian. No idea how these results will play in the market but they are good enough for me with an increase in the dividend of 4%. Lots of litigation on the go but nothing new there and they seem to be well into the vaping business.

Very happy to continue to hold.

Dod

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Re: British American Tobacco Results

#204470

Postby idpickering » February 28th, 2019, 7:25 am

Dod101 wrote:Thanks Ian. No idea how these results will play in the market but they are good enough for me with an increase in the dividend of 4%. Lots of litigation on the go but nothing new there and they seem to be well into the vaping business.

Very happy to continue to hold.

Dod



You're welcome Dod. I've topped my holdings up 3 times in the last year, and am glad I did.

Ian.

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Re: British American Tobacco Results

#204484

Postby Dod101 » February 28th, 2019, 8:33 am

Ah well. the price is down about 2.7% in a weak market. I do not know what people expect.

Dod

idpickering
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Re: British American Tobacco Results

#204503

Postby idpickering » February 28th, 2019, 9:40 am

Dod101 wrote:Ah well. the price is down about 2.7% in a weak market. I do not know what people expect.

Dod


Agreed Dod. I’ve given up on the fickleness of the investor masses. There’s to much uncertainty about currently. I am now focussed on the dividends nowadays, hopefully well covered, and rising.

Ian.

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Re: British American Tobacco Results

#204528

Postby moorfield » February 28th, 2019, 10:58 am

Dod101 wrote:Ah well. the price is down about 2.7% in a weak market. I do not know what people expect.

Dod



I think that has more to do with today's episode of the Donald & Kim show. The effect of that move on the yield you can buy today is not significant.

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Re: British American Tobacco Results

#204556

Postby idpickering » February 28th, 2019, 1:09 pm

This from TMF;

Is it finally time to return to the British American Tobacco share price?

Tobacco and smoking products company British American Tobacco (LSE: BATS) was a smouldering success for investors from the turn of the century onwards. The share price seemed to just keep drifting up.

But all that changed in the summer of 2017 when the stock blew one final puff on the uphill climb and then collapsed. It’s down more than 50% since then, and the valuation has derated. After trading at earnings multiples above 20 and a dividend yield close to two when it was in the zone of maximum investor optimism, you can now pick up the shares for a price-to-earnings rating a little over nine and a dividend yield of 7.4% or so.


https://www.fool.co.uk/investing/2019/0 ... are-price/

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Re: British American Tobacco Results

#204574

Postby Dod101 » February 28th, 2019, 2:20 pm

For once I agree with the TMF article. I think the BAT share price was subject to irrational exuberance or momentum investing just as , after sentiment turned, it was subject to just the opposite. I topped up at £25 last month and am very happy just to sit tight now.

Dod

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Re: British American Tobacco Results

#204576

Postby idpickering » February 28th, 2019, 2:38 pm

Dod101 wrote:For once I agree with the TMF article. I think the BAT share price was subject to irrational exuberance or momentum investing just as , after sentiment turned, it was subject to just the opposite. I topped up at £25 last month and am very happy just to sit tight now.

Dod



I agree with your sentiments Dod. I am happy to sit tight now too. I still can't get over how far they've fallen in sp terms. I do wonder what the sellers moved their dosh to though. IMHO, BATS are still safe as sound as an investment. I'm going to enjoy the 7.5% dividend yield either way.

Ian.

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BATs Yield getting hammered

#205816

Postby Walrus » March 6th, 2019, 8:36 am

Unfortunately looks like I won't be topping up this month
Seems am aggressive move on presumably last night's events

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Re: BATs Yield getting hammered

#205819

Postby Dod101 » March 6th, 2019, 8:48 am

Walrus wrote:Unfortunately looks like I won't be topping up this month
Seems am aggressive move on presumably last night's events


Sorry, what have I missed?

Dod

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Re: BATs Yield getting hammered

#205822

Postby monabri » March 6th, 2019, 8:53 am

Dod101 wrote:
Walrus wrote:Unfortunately looks like I won't be topping up this month
Seems am aggressive move on presumably last night's events


Sorry, what have I missed?

Dod


Judging by the share price...sorry, yield reduction, something positive....has smoking been made mandatory? ;)

( investigation required unless Walrus would kindly add more detail)

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Re: BATs Yield getting hammered

#205825

Postby Walrus » March 6th, 2019, 8:56 am

monabri wrote:
Dod101 wrote:
Walrus wrote:Unfortunately looks like I won't be topping up this month
Seems am aggressive move on presumably last night's events


Sorry, what have I missed?

Dod


Judging by the share price...sorry, yield reduction, something positive....has smoking been made mandatory? ;)

( investigation required unless Walrus would kindly add more detail)


The FDA commissioner Gottlieb quit. I noticed a bounce last night them saw it was up nearly 6 percent which seems OTT. Bit of a nuisance as I was intending on topping up today. Sorry I posted my first post before I'd finished writing it, then it got moved and it confused me.

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Re: British American Tobacco Results

#205827

Postby monabri » March 6th, 2019, 9:00 am

Thanks, Mr G. must have been quite an influential chap (to have that much effect! ).

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Re: BATs Yield getting hammered

#205828

Postby IanTHughes » March 6th, 2019, 9:03 am

Walrus wrote:
monabri wrote:
Dod101 wrote:Sorry, what have I missed?


Judging by the share price...sorry, yield reduction, something positive....has smoking been made mandatory? ;)

( investigation required unless Walrus would kindly add more detail)

The FDA commissioner Gottlieb quit.

Quit what? Smoking?
:lol:


Ian

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Re: BATs Yield getting hammered

#205833

Postby idpickering » March 6th, 2019, 9:17 am

IanTHughes wrote:
Walrus wrote:
monabri wrote:
Judging by the share price...sorry, yield reduction, something positive....has smoking been made mandatory? ;)

( investigation required unless Walrus would kindly add more detail)

The FDA commissioner Gottlieb quit.

Quit what? Smoking?
:lol:


Ian


I'll get your coat.... :lol:

Ian.

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Re: British American Tobacco Results

#205837

Postby jackdaww » March 6th, 2019, 9:21 am

presume there is no whiff ;) of backhanders, bribery and corruption involved here ?

:?

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Re: British American Tobacco Results

#205838

Postby Dod101 » March 6th, 2019, 9:22 am

The tobacco shares are very sensitive to any news, good or bad it would seem. To Walrus I would say, if he thinks BAT was good enough at £27 it is still surely good enough at say £31. The difference in yield must be very modest and the dividend is not I think in any danger. Maybe wait a day or for the initial excitement to wear off but of course that risks the price rising further.

Dod

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Re: BATs Yield getting hammered

#205847

Postby idpickering » March 6th, 2019, 9:40 am

Walrus wrote:
The FDA commissioner Gottlieb quit. I noticed a bounce last night them saw it was up nearly 6 percent which seems OTT. Bit of a nuisance as I was intending on topping up today. Sorry I posted my first post before I'd finished writing it, then it got moved and it confused me.


FDA Commissioner Gottlieb to Quit

Scott Gottlieb, the FDA commissioner who was one of the most active members of the Trump administration in preserving and promulgating regulatory initiatives, is resigning after two years in office. The resignation will be effective in about a month.

Sources told Fortune and other news outlets that Gottlieb was leaving because he had grown weary of commuting between his Connecticut home and Washington, D.C. He is apparently parting on good terms, with President Trump tweeting that he “has done an absolutely terrific job” and “will be greatly missed.”

Gottlieb put forth several policy initiatives that seemed to go against the general anti-regulatory thrust of the Trump administration, including aggressive restrictions on e-cigarettes and approving a host of generic drugs. On the food front, he was noted for keeping in place initiatives that began under Barack Obama’s administration, including mandatory labeling for genetically modified organisms and an expanded Nutrition Facts panel. On his watch, the FDA also sent warning letters to makers of dietary supplements for allegedly making unwarranted health claims.

“He has gone forward with a number of initiatives that seem to indicate that when it comes to food safety, this is not a political issue with this administration,” Allen Sayler, a consultant and former FDA employee, told Food Processing.



https://www.foodprocessing.com/industry ... b-to-quit/


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