(Reuters) -British American Tobacco on Thursday said it would take a 6.2 billion pound ($7.74 billion) hit from a Canadian lawsuit and warned tax changes in Bangladesh and Australia would dent its performance in 2025, sending its shares down more than 9%.
BAT (LON:BATS), the maker of Lucky Strike and Dunhill cigarettes, and some of its rivals were set to pay C$32.5 billion to settle a long-running case in Canada, but some parties, including Philip Morris International (NYSE:PM)'s Canadian affiliate, have since objected to the proposal.
In Australia and Bangladesh, meanwhile, BAT said tax increases would hurt its tobacco business.
Chief executive Tadeu Marroco said these represented "significant regulatory and fiscal headwinds" that would dent its performance this year, but their impact would recede into 2026 when BAT's investments would also pay off to spur growth.
Marroco also said he was hopeful U.S. President Donald Trump's new administration could tackle sales of illegal disposable vapes, which have dented its cigarette and vape sales in the country.
For 2025, the company expects just 1% revenue growth.
BAT shares fell more than 9%, wiping about $6 billion off its market capitalisation in its worst day since 2020.
Rae Maile, analyst at Panmure Liberum, said the drop was driven by the impact of the Canadian settlement on BAT's prospective earnings.
Under the proposed settlement, an upfront payment will be followed by annual payments, initially worth 85% of net income after taxes, excluding income related to alternative products like vapes, and reducing over time.
BAT said it currently assumed charges worth 100% of Canadian profits after interest and tax, excluding alternative products, in 2025.
A rebased version of its 2024 results showed this would have reduced earnings per share to 341.1 pence, versus a reported 362.5 pence.
Chris Beckett, head of equity research at BAT investor Quilter Cheviot, was less concerned about the Canadian settlement, however.
The weak 2025 guidance was a bigger negative, while the shares had only given up gains made during a good run in recent months, he said.
"It's still a cheap stock, it's paying me a very good yield," he said, adding BAT's ability to generate good cash returns long-term was likely unchanged.
($1 = 0.8008 pounds)