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BAT lowers FY'18 revenue outlook for tobacco heating segment, vapor business

British American Tobacco PLC on Oct. 16 lowered its full-year 2018 revenue guidance for its tobacco heating products and vapor business category to £900 million from the previous guidance of £1 billion.

The company said the lowered guidance stems from an expected reduction in planned year-end stocks as the tobacco heating category remains flat in Japan, in addition to the impact from the recall of the Vuse Vibe e-cigarette in the U.S.

Despite the flat market for tobacco heating products in Japan, the Glo brand's share has increased to 4.4% from 3.3% at the beginning of 2018, the company said. Meanwhile, BAT's global vapor business is expected to deliver both double-digit volume growth and double-digit constant-currency revenue growth during the year, with Vuse's strong performance in the U.S. driven by the launch of the Alto pod-mod vape and the reintroduction of Vibe.

BAT also predicts that a currency translation headwind of about 7% will negatively affect its adjusted EPS for fiscal 2018, assuming exchange rates remain unchanged. However, it does expect to exceed its high single-figure, constant-currency adjusted diluted EPS growth target for the year.