BAT Faces Billion-Dollar Hit Amid Legal and Regulatory Challenges

British American Tobacco is facing a significant financial hit due to a Canadian lawsuit settlement and tax changes in Bangladesh and Australia. The company's stock dropped more than 9%, reflecting concerns over its future earnings. BAT anticipates only 1% revenue growth for 2025 amidst these challenges.

British American Tobacco announced on Thursday that it expects a substantial financial impact of 6.2 billion pounds ($7.74 billion) due to a Canadian lawsuit settlement. This announcement came alongside warnings that tax changes in Bangladesh and Australia could negatively affect its 2025 performance, pushing shares down by more than 9%.

The maker of Lucky Strike and Dunhill cigarettes, along with some competitors, was initially poised to pay C$32.5 billion to resolve a long-standing case in Canada. However, not all parties, including Philip Morris International's Canadian affiliate, agreed to the settlement. Additionally, impending tax increments in Australia and Bangladesh are expected to challenge BAT's tobacco operations.

CEO Tadeu Marroco acknowledged these as 'significant regulatory and fiscal headwinds' impacting the current year but expressed optimism about recovery by 2026, driven by investments. BAT anticipates just a 1% revenue increase in 2025. Despite losses, some, like Chris Beckett of Quilter Cheviot, still see value in BAT, citing its consistent cash returns.

(With inputs from agencies.)