British American Tobacco (BAT) shares fell after the company reported a drop in annual sales due to foreign exchange headwinds.
The maker of Lucky Strike and Camel cigarettes said revenue fell 2.3% to £24.3 billion in 2018 but, stripping out currency effects, revenue increased 25% to £24.5 billion.
BAT made a profit of just £8.35 billion last year compared with £29.53 billion in 2017 which was bolstered by a one-off gain from the acquisition of rival Reynolds American.
On an adjusted basis, pre-tax profit increased to about £9 billion from £7 billion.
Shares were down 2.9% to 2,713.5p.
Outgoing chief executive Nicandro Durante said: “BAT performed well in 2018, exceeding our target of high single-figure adjusted constant currency EPS (earnings per share) growth, whilst continuing to invest in long-term sustainable returns.
He said the full-year effect of the Reynolds American acquisition and foreign exchange headwind distorted the group’s results, but “on an adjusted, constant currency, representative basis, this was a strong performance across the business”.
Mr Durante acknowledged that proposed potential regulatory changes in the US over vaping products has created some investor uncertainty, but said that BAT has a “long experience of managing regulatory developments, a track record of delivering strong growth while investing for the future, and an established multi-category approach”.
“Looking into 2019, we are confident of another year of high single-figure adjusted constant currency earnings growth and this confidence is reflected in our board’s proposal to increase the dividend by 4%.”
Mr Durante is to retire in April after nearly 37 years with the company and eight years at the helm. He will be succeeded by Jack Bowles, who is currently chief operating officer of BAT’s international business.
The company also announced on Thursday the departure of finance director Ben Stevens, who will retire from the board on August 5 after three decades with BAT.
Mr Stevens will be replaced by Tadeu Marroco, who is currently director for group transformation at the company.