British American Tobacco announced on Wednesday that it would reevaluate the value of some of its U.S. cigarette brands and take an impairment charge of approximately £25 billion ($31.50 bn).

The manufacturer of Lucky Strike and Dunhill cigarettes predicted that obstacles in the US, where a challenging economic climate and the widespread use of disposable, often illegal e-cigarettes, would hinder its expansion in 2023 and 2024.

It claimed that the £25 billion non-cash adjusting impairment charge was a result of economic difficulties facing American businesses, which have caused some consumers weary of inflation to switch to less expensive brands.

The company stated it will begin amortising the residual value of its combustibles brands in the United States in 2024.

BAT kept its full-year revenue forecast for 2023 at 3-5% organic growth in constant currency terms but noted that due to pressures in the US and planned investments in its newer products, such as vapes and oral nicotine, this would likely be at the lower end of the range.

The statement stated that it anticipated low single-digit growth in revenue and adjusted profit from operations in 2024 as a result of these challenges.

BAT's shares are currently down more than 8% on the day.

(Sources: investing.com, reuters.com)