Shares of British American Tobacco (BTI -2.29%) were gaining today after the global tobacco giant posted better-than-expected results for the first half of the year.
The stock was up 4.5% as of 2:19 p.m. ET.
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BAT tops expectations
Overall, British American Tobacco's (BAT) results were far from stellar, but the company still beat bottom-line estimates. The stock is cheap enough that investors will give it a boost on a decent earnings report, especially since most investors own the stock for its dividend.
BAT said organic revenue fell 0.8% in the first half, excluding the sale of its businesses in Russia and Belarus, finishing at 12.34 billion pounds (US$15.86 billion), slightly below estimates at 12.47 billion pounds (US$16.02 billion).
Revenue from new categories, a closely watched segment that includes smoke-free products like its Vuse vapes and Velo nicotine pouches, rose a modest 7.4%. Management said new category revenue was likely to miss its 5-billion-pound (US$6.4 billion) target in 2025 due to competition from illicit single-use vapor products in the U.S. and the sale of its Russia and Belarus businesses.
On the bottom line, adjusted organic profit slipped 0.9% to 5.57 billion pounds (US$7.16 billion). Adjusted earnings per share fell 2.1% to 1.69 pounds (US$2.17), better than estimates at 1.66 pounds (US$2.13).
CEO Tadeu Marroco expressed optimism about the second half of the year and beyond, saying, "Guided by our refined strategy, I am confident that we will progressively improve our performance to deliver 3-5% revenue, and mid-single digit adjusted profit from operations growth on an organic constant currency basis by 2026."
What's next for British American Tobacco
BAT maintained its full-year guidance with low-single-digit organic constant currency growth on an expected 2% global decline in tobacco volume. Even with today's gains, the stock's dividend is yielding 8.9%, and today's report shows that the dividend is reliable and the stock remains cheap.
