“I have been clear that we needed to invest to strengthen our U.S. business, accelerate innovation momentum, and enhance its capabilities that support our strategic delivery. While there is much to do, we are making clear progress.” - Tadeu Marroco, BAT CEO, FY’24 Results
Progress, in the truest sense, is less clear than portrayed.
Halfway through 2023, A Great Divergence was cast onto British American Tobacco, reshuffling expectations and widening the expanse between optimism and pessimism. By December of that year, it was clear the company was facing an Identity Crisis. Yet, despite the headwind-induced gloom, several bright spots were Shining Through by the time full-year 2023 results were released. Within half-year 2024 results, the group spotlighted seemingly less meaningful pieces, forcing the question: So What? Simultaneously, the immense raw value of the underlying cash flows put up an equally potent ‘So What?’ against many concerns. Enter into October 2024, despite the rightfully deserved objections toward the group’s ‘critical’ goals, the group announcing that its combustibles business would be Refocused should have been met with cheers. However, refocusing has proven difficult, and the group’s multi-category approach has strained resources, bringing on a bout of Indigestion.
BAT’s full-year 2024 results included the trademarked “A Better Tomorrow” and a vibrant color palette to illustrate how that bright future will come about. Yet, every tomorrow that has come thus far has had no shortage of setbacks and challenges, many of which still require answers. The raw value of the underlying cash flows remains. But that is not all that appears raw. Like a whetstone, the dulling of the story has ground down many investors’ patience closer to the bone.