British American Tobacco has raised its sales growth forecast after reporting a record number of new users for its vaping products.
The FTSE 100 company said Tuesday that the appeal of “no-burn” products, such as its Vuse vaping device, continued to grow, with 1.4 million new customers added in the last quarter ending in June.
Tobacco companies are pushing to build market share in what are known as “modern products,” as public health campaigns have lowered smoking rates around the world.
BAT now has nearly 15 million consumers of products such as vaping devices, heated tobacco, and oral nicotine bags. This compares with the 638 billion cigarette bars the company sold last year to roughly 140 million smokers.
The “record quarter for consumer acquisition” prompted BAT to raise its full-year revenue growth forecast to more than five percent. The old orientation was 3% to 5%.
Earnings per share remained at the previous forecast of “mid-digit” growth as the company expands its investment in modern products, a category it expects to be profitable by 2025.
Jack Bowles, BAT’s chief executive, said 2021 would be a pivotal year for the business, which owns brands such as Lucky Strike and Dunhill cigarettes.
Tobacco stocks have been under pressure, in part due to concerns about more regulation. However, some countries have less strict anti-smoking rules, including Pakistan, Bangladesh and Vietnam, which BAT pointed to on Tuesday as key areas for growth.
BAT’s share price, which has fallen nearly 10 percent last year, was up 2 percent on Tuesday morning.
Alicia Forry, an analyst at Investec, said BAT’s Vuse was “approaching global leadership” in vaping, with a market share of more than 31 percent in five of the world’s largest markets.
Billionaire investor Kenneth Dart has become BAT’s third-largest shareholder in recent months, building a stake worth nearly £ 4.5bn.