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The Guardian - UK
The Guardian - UK
Business
Rob Davies

British American Tobacco to end sales in Russia within a month

The London offices of British American Tobacco, in London, Britain
BAT did not disclose how much it would receive for the sale, or whether the terms included a clause that would allow it to buy the business back in future. Photograph: Toby Melville/Reuters

British American Tobacco says it will sell its last cigarette in Russia within a month, ending its presence in the world’s fourth-largest tobacco market a year and a half after it first pledged to do so in response to the invasion of Ukraine.

The London-based maker of Lucky Strike and Camel cigarettes came under fire in March last year after initially continuing to operate in Russia, breaking ranks with global brands such as Nestlé, Unilever, Coca-Cola and McDonald’s.

The decision was reversed just two days later, with the company citing its “ethos and values”.

More than 18 months after that decision, BAT, which holds 25% of the Russian market, said it had finally reached an agreement to sell its Russian and Belarusian businesses to a group led by its Moscow management team.

“Upon completion, BAT will no longer have a presence in Russia or Belarus and will receive no financial gain from ongoing sales in these markets,” the London-based tobacco and nicotine company said in a statement.

BAT did not disclose how much it would receive for the sale, or whether the terms of the agreement included a clause that would allow it to buy the business back in future if sanctions on Moscow are lifted.

Russia accounted for 2.7% of the £13.4bn in revenues that BAT generated in the first half of 2023. On that basis, exiting Russian means forfeiting about £725m annually.

It expects a hit to profits of about £290m, which it said was in line with guidance issued at the company’s half-year results published last month.

BAT said it would pull out of Russia in March 2022, as companies from around the world dashed for the exit in response to the Kremlin’s invasion of Ukraine, which triggered sanctions from the US, the EU and the UK.

At the time, BAT’s chief strategy and growth officer., Kingsley Wheaton, said BAT could not simply shut down its business overnight because that would expose its 2,500 employees in the country to potential prosecution under Russian law.

The company disclosed a one-off charge of £612m relating to the planned exit when it published full-year results in February, a figure that factored in the expected terms of any sale.

Any change to that figure will not be disclosed until BAT’s full-year results in February.

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