British American Tobacco (BAT) shares fell more than 4 percent to R548.45 on the JSE yesterday Picture: Adnan Abidi / Reuters
CAPE TOWN - British American Tobacco (BAT) shares fell more than 4 percent to R548.45 on the JSE yesterday as it warned of cigarette sales falling globally, even though its chief executive Jack Bowles said the group was on track for a good performance in 2019.

The shares closed at R554.28.

BAT said full-year industry cigarette volumes globally were expected to be down about 3.5 percent, which was slightly lower than their previous estimate.

Revenue and adjusted operating profit growth in line with guidance and new product sales were growing strongly, Bowles said yesterday.

Bowles said the new category products of BAT, the second-biggest tobacco group in the world, which include its vaping, snuff, oral nicotine and e-cigarette brands, were on track to deliver 30 to 50 percent constant currency revenue growth.

Tobacco firms have been investing heavily in new products as demand for traditional cigarettes declines.

Bowles said the company anticipated high single digit adjusted diluted growth in earnings per share, at constant exchange rates, for the year.

“We intend to consolidate our new category portfolio into fewer brands. Our strategic brands continue to take share, while new product launches and a sharpened focus on priority products and markets are expected to drive stronger new category growth in the second half,” he said.

“We are creating a stronger, simpler business and driving a step change in new categories, built on the foundation of a strong combustible business, he added.

The combustibles business continued to grow strongly, driven by the growth of the strategic brands and good pricing.

BAT said the US business was performing well, with good pricing and value share growth in an industry expected to be down 4 to 5 percent on a volume basis for the full year.

Credit Suisse analysts, according to a Reuters report, said that the forecast of a further decline in cigarette volume “is not a surprise given the year-to-date decline in the US is more than 5 percent", although they slightly questioned management’s “feel” for the market.

BUSINESS REPORT