British American Tobacco has recorded an annual pre-tax loss of £17.1bn in 2023, after recording a £9.3bn profit the year previous.

The firm, which owns brands including Lucky Strike and Dunhill, saw a £27.3bn write down on its US brands, which is higher than the £25bn figure predicted in December.

However, British American Tobacco has put these results down to its long-term strategy to move away from traditional cigarettes and lower sales as a result of economic uncertainty.

Furthermore, the group has pointed towards "the growth of illicit single-use vapour products and uncertainty around a potential menthol ban in the US" as additional reasons for this loss.

Investment director at AJ Bell, Russ Mould, commented: "Usually, a company announcing losses running into the tens of billions of pounds wouldn’t be cause for celebration among investors. However, British American Tobacco has done just that this morning and been rewarded with share price gains.

"The impairments which have tipped British American Tobacco into a mega loss are non-cash items, relating to a write-down of the value of its acquisition of the part of Reynolds American it did not already own in 2017. While the size of the write-down has grown slightly, it was previously flagged in December.

"There was also a nugget of good news in today’s results for the market to latch on to – the company has hit profitability with its ‘new categories’ products. These include its big vaping brands Vuse and Velo and these ‘new categories’ sales are seen as the company’s answer to declining levels of cigarette smoking in the West."

Looking forward, British American Tobacco said it expects sales by volume to drop by around 3% in 2024, but the firm stated that it still backed its previous guidance, which predicted “low single digit” organic revenue and earnings growth for the year.

Furthermore, the company said it does not expect to take a financial hit on its UK businesses should the Government’s ban on disposable vapes go ahead.

Chief executive officer at British American Tobacco, Tadei Marroco, stated: "[Last year] was another year of resilient financial performance and delivery in line with our guidance, underpinned by our global footprint and multi-category strategy, despite a challenging macro-environment.

“New categories delivered continued volume-led revenue growth and increased profitability, driven by Vuse and Velo. As a result, our new categories portfolio has turned profitable two years ahead of our original target. Our refined strategy commits us to 'building a smokeless world', a predominantly smokeless business, with 50% of our revenue from non-combustibles by 2035.

"I am confident that the choices we have made will drive our long-term success and create sustainable value for all our stakeholders."

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