British American Tobacco said on Wednesday it took a £957 million ($1.15 billion) impairment charge related to the transfer of its Russian business, pushing half-year earnings of the Lucky Strike cigarette maker 25% lower.
The London-based firm, which also makes Camel and Dunhill cigarettes and controlled almost a quarter of the Russian market said in June it was in advanced talks with its distributor in the country to sell the business.
No agreement to transfer the shares has been entered into, BAT said.
Profit Drop
It reported a 25% drop in profit from operations on a reported basis to £3.68 billion ($4.44 billion) for the six months to 30 June as a result of the charge.
BAT expects global tobacco industry volume to be down about 3%, partly because of the Russia-Ukraine crisis.
"While we are not immune to the current macro environment, we are confident in our full-year guidance, irrespective of the timing of the transfer of our Russian business," the company said in a statement.
Revenue Expectations
Its first-half revenue beat expectations, rising 5.7% to £12.87 billion, helped by higher prices and steady demand for its vaping and oral nicotine products.
"We expect to generate £40 billion of free cash flow before dividends over the next five years," Jack Bowles, chief executive said.
Adjusted operating margin of 43.9%, came in above company-compiled estimates of 43.5%.
Shares of the Vuse vape pods-maker were up 0.7% in early trading.
Read More: BAT Confident Of Meeting Targets Despite Timing Of Russian Business Transfer
News by Reuters, edited by Donna Ahern, Checkout. For more supply chain stories, click here. Click subscribe to sign up for the Checkout print edition.
