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Tobacco companies were shaken up today

As I've noted here, for many of us investors, these companies are popular mainly because of their attractive dividend. In that regard, it is mentioned here often. This post will mainly focus on British American Tobacco $BTI-1.1% $BATS.L+0.2%, but as there has been more talk lately about hitting the ranks of smokers and trying to keep them healthy, these moves will probably affect all companies of this type over time.

This is about companies going through a transformation to electronic smoking. Whether this is better, I don't want to go into more detail because I'm a die-hard non-smoker, but I'm using this business in receiving nice dividends. 😊

Here's today's report that explains the stock's decline.

The CEO of British American Tobacco ( BTI ), Tadeu Marroco, said: "In line with our vision to 'Build a Smoke-Free World' and combined with the current macroeconomic headwinds impacting the US combustibles industry, we will take an accounting non-cash impairment charge of approximately GBP25 billion in 2023. This accounting adjustment primarily relates to certain of our purchased US combustibles brands as we are now assessing their carrying value and economic life over an estimated 30-year period. Accordingly, we will start to amortise the remaining value of our US fuel brands from January 2024. Building on our strong performance in 2023, it is clear to me that now is the right time to invest further to accelerate our transformation. We are making active investment decisions to strengthen our U.S. business, accelerate the momentum of heated product innovation around the world, and improve the capabilities that support our strategic delivery. These investments will have an impact in 2024, and in addition to continued macroeconomic pressures in the U.S., we now expect revenue growth and adjusted earnings from operations in the low single digits on an organic basis1 at constant rates. By 2026, we expect progressive improvement to 3-5% revenue growth and mid-single digit adjusted operating profit on an organic basis1 at constant rates. We will continue to reward shareholders through our strong cash returns, including our progressive dividend, and once we reach the midpoint of our leverage range, we will evaluate all opportunities to return excess cash to our shareholders. I am confident that the decisions we make today will drive our long-term success and deliver sustainable value for all of our shareholders."

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So investors, what's your take on this? 😊 As I mentioned before, I'm a non-smoker, but just this stuff, even though it's not healthy it's always going to be there and maybe it's not exactly moral, but I like to at least make a little bit of money on it, so today I added more shares to my portfolio. 😊

At my age it would probably not be nice if I wrote that I am a smoker, but of course I am a non-smoker and I am sure I will be one until I die. From a moral point of view it's probably not fine, but I like the tobacco companies and even more the dividends they send me :D. Despite some problems I trust the companies and I believe they will be with us for a long time. I bought BTI in the downturn and I watched that MO wasn't at a bad price either, so I bought BTI along with MO :D.

No, it's good you're a non-smoker and just keep that mindset. 👍 And as you say, although this business has to go through a bit of a transformation now, they'll always just take it back on the margins, it's a drug and people are always happy to spend money on it.


Well, when the CEO himself publicly admits that he doesn't see the future of the core segment too rosy, it scares the market.

Yes, that's how he said that sentence too, I read it in another article on the site, but I didn't want to post it here. I personally take it that he also as he put it, yes he is scared, he doesn't see a future in conventional smoking, but smoking is not going to stop, the market just needs to change to the electronic crap because he wants to fight more against that "stinky" as I call it, smoking. But nobody is going to ban it, it's a big business and even the states make a huge profit from it through taxation ...so it seems like alarmist useless news to me, at least for me. 😊

I plan to buy in and collect a nice dividend. 😊

I feel the same way here, I don't think of it as a growth stock, but as a steady dividend payer. 😊

You could say that everything was kind of expected. I've been letting it sit and I'll shop tomorrow. The thesis hasn't changed in any way.

Agreed. Buy and hold and let the dividends work. :)

I do pay tribute and as you write, vices will always be in society, the states make huge amounts of money from these products, so why shouldn't we as minority shareholders, but I understand everyone has their morals set differently, but this is purely my personal opinion.

Exactly, I agree, and so do we. Like yes, there is marketing going on about how they want to look after the health of smokers, but that's just marketing and the state and the holding companies don't care, it's business and if anyone has a responsibility for health, it's purely the smoker. It's his choice, nobody is forcing him to do it. That's why I have the same attitude, it's business and I'm happy to make money.

We agree completely, we see it the same way.