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BAT Shares Continue Rally Amid Revised Revenue Growth

British American Tobacco has declared the year to be a 'pivotal' one after the release of its revenue forecast, which shows 5% YOY growth, thanks to record sales of non-tobacco products that have pushed the BAT share price higher.

  • British American Tobacco announced FY revenue growth of 5%.
  • Non-tobacco product consumers up 1.4m to 14.9m.
  • BAT share price opened higher at £28.21 on 8 June.
  • Slow recovery of travel sector could dampen growth.
  • Ready to trade the BAT share price? Open an account today.

Why have BAT shares been surging?

British American Tobacco shares open higher on 8 June at £28.21, the highest they have been in two months, following the release of an upbeat revenue forecast that has surpassed expectations. Released on the morning of 8 June, the report shows that the FY revenue growth for BAT has been revised upwards to 5%. Concluding that 2021 will be a ‘pivotal’ year, according to Jack Bowles, chief executive of BAT, the company continues to expand into ‘non-combustible', non-tobacco-based products.

As a result, the BAT share price was up 2% on 8 June - a positive rise, considering the fact that the price has fallen by more than 10% over the past year. British American Tobacco reported record sales growth for vaping products, which are the main driver for revenue growth. Flagship products such as their mass-produced Vuse vaping kit helped add 1.4 million non-smoking customers to BAT's balance sheet.

Is the future bright for British American Tobacco?

Although BAT is currently cashing in on the growth of vaping products, its future success is far from certain. The BAT share price has not recovered from its 10% collapse in 2020, driven partly by the shuttering of the global travel industry.

As such, BAT is still unable to realise profits from one of its main sources of revenue - duty-free airport vendors. In addition, tobacco-based products are still by far their biggest product range. As travel restrictions continue to affect trade, and the global popularity of cigarettes continues to wane, BAT's longer-term prospects remain uncertain.

Will the British American Tobacco share price continue its rally? Trade BAT shares today

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This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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