London, United Kingdom – British American Tobacco on Wednesday announced a shock £25-billion ($32 billion) impairment charge on US cigarette brands, citing a slowing economy and shift away from traditional products, sending group shares sliding.
Companies like BAT face plunging demand for cigarettes in Western markets, where high taxes, smoking bans and health fears persuade many consumers to give up or switch to other controversial smoking products.
The maker of Lucky Strike and Dunhill cigarettes has sought to capitalize on the fast-growing vaping market, which is clouded by health concerns.
BAT said such a shift “in combination with the current macro-economic headwinds impacting the US combustibles industry, in 2023 we will take an accounting non-cash adjusting impairment charge of around £25 billion”.
“This accounting adjustment mainly relates to some of our acquired US combustibles brands, as we now assess their carrying value and useful economic lives over an estimated period of 30 years.”
The London-listed company added that its overall revenue growth for the current year was set to be at the “low end” of its previous guidance of between three and five percent.
Wednesday’s shock impairment charge sent BAT shares sinking 7.6 percent to £22.98 on London’s FTSE 100 index, which was up 0.4 percent in mid-morning deals.