Cigarette makers were falling on Wednesday after
British American Tobacco
announced a massive $32 billion write-down of its brands.
London-listed BAT, which makes Lucky Strike and Dunhill, said it would book a one-off impairment charge for the value of the company’s cigarette brands. Its American depositary receipts plunged 8%.
Altria Group
and
Philip Morris International,
which produce the Marlboro brand of cigarettes, fell in sympathy. They were each down about 1% in premarket trading. Altria spun off Philip Morris International in 2008, but still controls Philip Morris brands in the U.S.
The drops underscore how precarious the outlook is for tobacco firms, even as they try to move beyond smoking to vapes or other products. Some countries are looking to phase out smoking altogether—New Zealand recently considered a law that would have eventually banned selling cigarettes in the country.
“British American Tobacco is keeping its head above water in very choppy seas,” said Derren Nathan, head of equity research at Hargreaves Lansdown. “From a public health perspective it’s encouraging to see continuing declines in global tobacco consumption but there are still question marks about the safety of the newer alternatives.”
Write to Brian Swint at [email protected]
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