...Fitch's affirmation of British American Tobacco plc's (BAT) ratings follows the publication of the first set of annual results after completion of the acquisition by BAT of the remaining 58% stake in its 42%-owned associate Reynolds American Inc. (RAI) in July 2017, and the subsequent combination of the two companies. Post-transaction, BAT is the largest global industry player and benefits from an enhanced geographic footprint and access to cash flows in different currencies, stronger scope to pursue its Next Generation Products strategy and further opportunities to improve its profit margins due to synergies. However, increased leverage stemming from the acquisition affects BAT's credit profile. Despite positive free cash flow (FCF) generation averaging GBP2 billion pa in 2018-2020, we project leverage to remain high for its rating class although financial headroom should improve over 2018-2020; this supports the Stable Outlook....
