British American Tobacco has increased its forecast for sales growth after reporting a record number of new users for its vaping products.
The FTSE 100 company on Tuesday said the appeal of “non-burning” products, such as its vaping device Vuse, continued to grow, with 1.4m new customers added in the latest quarter ending in June.
Tobacco companies are pushing to build market share in what are known as “modern products” as public health campaigns have pushed down smoking rates around the world.
BAT now has nearly 15m consumers of products such as vaping devices, heated tobacco and oral nicotine pouches. This compares with the 638bn sticks of cigarettes the company sold last year to roughly 140m smokers.
The “record quarter for consumer acquisition” prompted BAT to raise its full-year revenue growth forecast to more than five 5 per cent. Previous guidance was 3 per cent to 5 per cent.
Earnings per share remained at the previous forecast of “mid-single digit” growth as the company expands its investment in modern products, a category it expects to be profitable by 2025.
Jack Bowles, BAT’s chief executive, said 2021 would be a pivotal year for the business, which owns brands including Lucky Strike and Dunhill cigarettes.
Tobacco stocks have been under pressure, partly because of worries about further regulation. Some countries, however, have less tough anti-smoking rules, including Pakistan, Bangladesh and Vietnam, which BAT on Tuesday singled out as key areas for growth.
BAT’s share price, which has fallen nearly 10 per cent in the past year, was up 2 per cent on Tuesday morning.
Alicia Forry, analyst at Investec, said BAT’s Vuse was “approaching global leadership” in vaping, with a market share of more than 31 per cent in five of the world’s largest markets.
Billionaire investor Kenneth Dart has in recent months quietly became BAT’s third-largest shareholder, building a stake worth nearly £4.5bn.