British American Tobacco CEO suddenly leaves

It’s never a apt inspect when a company says its chief executive is leaving with immediate effect, and after only four years in the job. This suggests something is not factual in the business.

The fact British American Tobacco has promoted its finance director to the CEO role provides some comfort that the modern leader already knows the business inside out. However, it raises a lot of questions as to why the change has happened.

AJ Bell’s Russ Mould said: “Unlike many companies in this situation, we haven’t had any considerable clues for problems behind closed doors for British American Tobacco. There gain been no profit warnings or activist investors calling for change. The only high-profile calls from shareholders gain been a request by GQG Partners to plod its stock listing from London to the US in the hope of getting a higher valuation.

“Like many of its peers, British American Tobacco has been shifting its business model from traditional cigarettes to alternatives such as vaping as consumer preferences change. Many countries around the world are paying closer attention to health and the environment, meaning tobacco manufacturers need to display they are doing more to evolve.

“A lot of investors gain turned their back on the sector due to ESG concerns, which explains why shares in stocks like British American Tobacco are relatively cheap and offer high dividend yields. They’re deeply unloved.

“While these businesses remain highly cash-generative, they are having to find modern ways to attract investors and win over sceptics.

“Perhaps British American Tobacco’s board felt that the outgoing CEO Jack Bowles wasn’t doing enough to push the company’s transformation efforts. He is thanked for being the architect of a modern strategy, but there is reference to needing someone modern to catch the business to the next level. Tobacco and vaping are highly competitive markets and it will require some vivid thinking to stand out from the crowd.”