British American Tobacco Writes Down Cigarette Brands, Preps to Account for End of Traditional Combustibles Era

British American Tobacco (BAT) has disclosed a multi-billion dollar impairment affecting its portfolio of US cigarette brands. BAT will also amortize these brands from 2024 on, becoming the first major cigarette distributor to enact an effective expiry date on its combustible tobacco business. Legislation meant to cut cigarette consumption is becoming more aggressive in the US and beyond.

BAT will now embark on a strategy to derive half of its revenues from non-traditional cigarettes by 2035. Thus far, strategies enacted by big tobacco firms to replace declining cigarette sales have yielded mixed results. Recent acquisition activity indicates a shift toward the cannabis business will form a key plank of British American’s strategy going forward.

Related Stocks: British American Tobacco p.l.c. (BTI), Altria Group, Inc. (MO), Philip Morris International Inc. (PM)

In the latest blow to big tobacco valuations, British American Tobacco (BAT) – the third-largest tobacco product distributor in the world – is taking a massive non-cash adjusting impairment charge of -$31.5 billion on its widely-recognizable portfolio of US cigarette brands. The owner of Camel, Newport, American Spirit, Lucky Strike, Pall Mall, and other labels is taking steps toward a new strategy that will attempt to shift half of their business toward non-traditional cigarettes by 2035. Chief Executive Tadeu Marroco noted that it was no longer possible to justify an indefinite value for its cigarette brands equating to around $80 billion on BAT’s balance sheet.

BAT appeared resistant to this course of action until recently, holding fast to cigarettes while competitors Altria and Philip Morris shifted toward a slate of alternatives. These products, which range from vaporizers to heated tobacco devices, have delivered mixed results thus far, but still seem to…