In This Article:
* Expects to generate 40 bln pounds FCF over next 5 years
* H1 profit from operations drops 25%
* H1 operating margin of 28.7% down 11.7 ppts (Adds details on results)
July 27 (Reuters) - British American Tobacco said on Wednesday it took a 957 million pound ($1.15 billion) impairment charge related to the transfer of its Russian business, pushing half-year earnings of the Lucky Strike cigarette maker 25% lower.
The London-based firm, which also makes Camel and Dunhill cigarettes and controlled almost a quarter of the Russian market said in June it was in advanced talks with its distributor in the country to sell the business.
No agreement to transfer the shares has been entered into, BAT said.
It reported a 25% drop in profit from operations on a reported basis to 3.68 billion pounds ($4.44 billion) for the six months to June 30 as a result of the charge.
BAT expects global tobacco industry volume to be down about 3%, partly because of the Russia-Ukraine crisis.
"While we are not immune to the current macro environment, we are confident in our full-year guidance, irrespective of the timing of the transfer of our Russian business," the company said in a statement.
Its first-half revenue beat expectations, rising 5.7% to 12.87 billion pounds, helped by higher prices and steady demand for its vaping and oral nicotine products.
"We expect to generate 40 billion pounds of free cash flow before dividends over the next five years," chief executive Jack Bowles said.
Adjusted operating margin of 43.9%, came in above company-compiled estimates of 43.5%.
Shares of the Vuse vape pods-maker were up 0.7% in early trading. ($1 = 0.8293 pounds)
(Reporting by Eva Mathews and Yadarisa Shabong in Bengaluru; Editing by Sherry Jacob-Phillips, Uttaresh.V and Tomasz Janowski)