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 Vuse vaping device, continued to grow, with 1.4m of new customers added in the last quarter ending June.
Tobacco companies are pushing to build a market share in what are known as “modern products” that public health campaigns have lowered smoking rates around the world.
BAT now has about 15m consumers of products such as vaping devices, heated tobacco and oral nicotine bags. This compares with the 638 billion cigarettes the company sold last year to about 140 million smokers.
The “fourth record for consumer purchasing” encouraged BAT to raise its forecast of year-over-year revenue growth to more than five 5 percent. The previous lead was 3 percent to 5 percent.
Earnings per share are in line with 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 crucial year for the business, which owns brands including Lucky Strike and Dunhill cigarettes.
Tobacco stocks have come under pressure, in part because of concerns about further regulation. Some countries, however, have less stringent anti-smoking rules, including Pakistan, Bangladesh and Vietnam, which BAT on Tuesday selected as key areas for growth.
The stock price of BAT, which fell nearly 10 percent last year, was up 2 percent Tuesday morning.
Alicia Forry, an analyst at Investec, said BAT’s Vuse was “approaching global leadership” in vaping, with a market share of more than 31 percent in five of the world’s largest markets.
Billionaire investor Kenneth Dart has become quiet in recent months Third shareholder of BAT, building a stake worth nearly £ 4.5 billion.