British American Tobacco Shares Slump 8% as Cigarette Brands Face £25 Billion Write-Down

British American Tobacco (BATS, BTI) has announced a significant write-down of its cigarette brands, resulting in a slump of 8% in its shares. The write-down, valued at £25 billion ($31.5 billion), impacts the company's acquired U.S. combustibles brands, including well-known names like Camel and Newport.

Assessing the long-term value of these brands over a 30-year period, British American Tobacco acknowledges the challenges posed by macroeconomic pressures and the rise in demand for illicit disposable vapes, both of which will impact its U.S. business next year. As a result, the company is expecting low-single-digit revenue and adjusted profit from operations growth in the coming year, with stronger performance anticipated in the latter half.

Looking ahead, British American Tobacco is focused on transitioning to noncombustible products, specifically vaping. It aims to achieve organic revenue growth of 3% to 5% and mid-single-digit adjusted profit from operations growth by 2026.

In addition, the company has stated that its adjusted net debt-to-EBITDA ratio will be 2.7 by the end of this year, potentially delaying any share buybacks until at least the first half of next year, according to analysts at Citi.