Bulletin: BAT's Credit Metrics Expected To Show Continued Deleveraging

LONDON (S&P Global Ratings) Feb. 18, 2021--S&P Global Ratings said today that British American Tobacco's (BAT's) 2020 operating performance is broadly in line with our base-case expectation. The company's annual results confirm that it can generate significant free operating cash flow, and that it is on track to meet its net debt-to-EBITDA target of around 3.0x (according to the company's adjustments) by year-end 2021. BAT also announced that it has updated its long-term net debt-to-EBITDA target to 2.0x-3.0x (according to the company's adjustments), from the higher end of the 1.5x-2.5x corridor previously, which we view as negative from a credit standpoint. We understand BAT has taken this action to maintain more flexibility to invest in new product categories, including possibilities

...February 18, 2021 LONDON (S&P Global Ratings) Feb. 18, 2021--S&P Global Ratings said today that British American Tobacco's (BAT's) 2020 operating performance is broadly in line with our base-case expectation. The company's annual results confirm that it can generate significant free operating cash flow, and that it is on track to meet its net debt-to-EBITDA target of around 3.0x (according to the company's adjustments) by year-end 2021. BAT also announced that it has updated its long-term net debt-to-EBITDA target to 2.0x-3.0x (according to the company's adjustments), from the higher end of the 1.5x-2.5x corridor previously, which we view as negative from a credit standpoint. We understand BAT has taken this action to maintain more flexibility to invest in new product categories, including possibilities for external growth. Considering BAT's priorities--to reduce leverage and invest in new categories--we do not assume more aggressive shareholder distribution (via a share buyback or higher...

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