BAT expects £5bn revenue from 'next generation' products by 2022
British American Tobacco expects to make more than £5bn a year in revenue from e-cigarettes and other so-called next generation products within five years, the company said on Wednesday.
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The maker of Dunhill and Pall Mall forecast sales of next-generation products would double from more than £500m this year to over £1bn in 2018, when this arm of the business will break even. By 2022 revenues will exceed £5bn and the products will generate "substantial profit".
BAT also set out expected benefits from currency swings after the pound fell and it bought Reynolds in the US. If foreign exchange rates are unchanged for the rest of the year there will be a 6.5% gain for operating profit and 5.5% for earnings per share.
BAT shares were the biggest gainers in the FTSE 100, rising 2.2%, or 104.5p, to £49.295.
Three months after the Reynolds acquisition, the group is performing well and expects a good year of earnings growth irrespective of currency movements, BAT said before a presentation to investors. Business has been tough in markets such as Russia but recent developments are encouraging, it added.
Nicandro Durante, BAT's chief executive, said: "We are very pleased to be sharing more details on the opportunities for BAT in NGPs and combustibles, and to introduce our new US subsidiary just three months after the completion of the Reynolds acquisition."