British American Tobacco halts Russia sales after U-turn

Owner of brands including Rothmans had said it would still sell products – but will now pull out

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British American Tobacco has reversed its decision to continue selling cigarettes and other nicotine products in Russia, putting the sudden change of heart down to its “ethos and values”.

The owner of brands including Rothmans and Lucky Strike said it would pull out of Russia after all, two days after breaking ranks with companies such as Nestlé, Unilever, Coca-Cola and McDonald’s by refusing to quit its operations there.

A string of big corporations have halted operations in Russia as part of the global response to the invasion of Ukraine but BAT had previously said that, while it would scale back some of its activities, it would not stop selling its products.

On Friday afternoon, the London-based company said it would go further.

“Building on our announcement of 9 March 2022, we have now completed the review of our presence in Russia,” said BAT.

“The context is highly complex, exceptionally fast-moving and volatile.

“We have concluded that BAT’s ownership of the business in Russia is no longer sustainable in the current environment.

“Today, we have initiated the process to rapidly transfer our Russian business in full compliance with international and local laws. Beyond continuing to pay our 2,500 employees, we will do our utmost to safeguard their future employment.

“Upon completion, BAT will no longer have a presence in Russia.”

Russia has said it plans to seize the assets of western companies leaving the country. On Thursday the country’s economic ministry said it could take temporary control of departing businesses in which foreign ownership exceeds 25%.

Vladimir Putin said the Kremlin could find legally viable ways to seize international firms. The government would push to “introduce external management and then transfer these enterprises to those who actually want to work,” Putin said.

Announcing its abrupt U-turn, BAT said the company prided itself on “our values and our ethos”.

Russia is named as a key growth market for both cigarettes and heated tobacco in BAT’s annual report and the company said the war and its decision to leave the market would have an impact on its finances.

Ukraine and Russia account for 3% of BAT’s revenues and a smaller proportion of profits, it said.

As a result, revenues are likely to increase this year by between 2% and 4%, a slight downwards revision compared to its previous estimate of 3% to 5%.

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