British American Tobacco p.l.c. (NYSE:BTI) Q4 2022 Earnings Call Transcript

Jack Bowles: I think it’s a very important point of Tadeu. The fact that they give PMTAs to e-cigarette means that it’s a less risky product recognized, yes? So it starts there. So that gives a lot of traction also in the rest of the world.

Gaurav Jain: Okay. Sure. And my last question is on — you will have a new competitor next year entering the market in the U.S. with heated tobacco product. And you have filed for the glo Hyper PMTA in December ’21, if I remember correctly. So when can we expect that PMTA to come? And would you launch soon after in the U.S. market?

Jack Bowles: Yes. First of all, you have to take it piece by piece. First. Combustible business is extremely important in the U.S., yes. Even if you don’t like it pays your bills every day. That gives you the resources to be able to invest, that’s number one. The second thing is there is already 20% of the market that is in New Categories, mostly e-cigarettes, that’s already there. And that’s I think very, very interesting in terms of margins per 1,000, okay? The second — the third thing is there is a lot of things that have been said in terms of THP in the U.S. It has been on the market for two years, it has not worked and the high tar levels and everything. But at the end of the day, what is important is what position you have in New Categories in the U.S. And we have a presence in the three categories.

We have PMTAs that are in progress, and this is going to be more in two years from now or at least. So you have to take your time and look at what is there, what is growing, and then that’s for the mid- to long term. And I’m confident that when you see what has happened in Europe between THP and e-cigarettes, there has always been a very strong space for e-cigarette in high tar markets. In Japan, it is different because there is very low tar nic consumers that are already there. So the satisfaction gaps are lower, and you have always in the process of PMTAs. You have to have the science that goes with it. So you don’t have the latest product that comes to the U.S. You have the products that were there three, four years ago where you have the science that you have to take the time for making the science, and then you can come with the — to the market with a product that has been there a long time ago in other markets.

So that’s an iteration process, where New Categories, I’m very pleased to say, is growing in the U.S. and where there will be more opportunities in the three to five years to come. Okay? And as you see in our results in the U.S., now the New Categories, the e-cigarette is having a major part in terms of our profitability and our financial numbers, which we are very pleased with, okay?

Gaurav Jain: Sure. Thank you so much.

Operator: It appears that there are no further questions at this time. I would like to turn the conference back to Mr. Jack Bowles for closing remarks.