Share price decline smokes out changing of the guard at BAT

19 September 2018, 20:15 | Updated: 19 September 2018, 21:17

The chief executive of British American Tobacco (BAT) is preparing to step down in the wake of a sector-wide share price decline prompted by investor concern over slowing sales growth.

Sky News has learnt that Nicandro Durante, who has run the world's biggest cigarette manufacturer by number of countries since 2011, is expected to leave the company at some point in the next year.

Sources said on Wednesday evening that Mr Durante, a Brazilian-Italian national, was likely to be replaced by an internal candidate.

Jack Bowles, BAT's chief operating officer, is regarded as the frontrunner to be the company's new boss, although the chief marketing officer, Andrew Gray, is also rumoured to have been a contender for the role.

The precise timing of an announcement about the succession plan is unclear and one source cautioned that it may not be imminent.

A ‎changing of the guard at the Lucky Strike and Dunhill maker will come little more than 18 months after BAT announced the takeover of US tobacco group Reynolds in a $49.4bn deal.

However, BAT shares‎ have slumped by nearly a quarter during the last 12 months amid declining growth in core tobacco products and uncertainty about the future success of its range of so-called next-generation products.

The latter category, which includes BAT's vaping brand, Vype, and Glo, its tobacco pipe, are an increasingly important driver of cigarette manufacturers' profits.

BAT's London-listed rival, the Davidoff- and West-maker Imperial Brands, ‎has also seen its shares decline by more than a fifth during the last year.

Mr Durante‎ has spent 37 years at BAT and its subsidiaries, joining its Brazilian unit in 1981, before being seconded to the company's UK head office in 1995.

He then spent time in Asia, South America ‎and joined BAT's board in 2008 as its chief operating officer.

Despite its weak share price performance, BAT remains one of the largest companies in the FTSE-100 by market value.

Under Mr Durante, BAT's efforts to grow its next-generation division have included a number of acquisitions, including Ten Motives, a UK-based e-cigarette company.

He has acknowledged that the industry has "entered a dynamic period of change"‎ but insisted that the growth in alternative products has given the company the opportunity to "transform tobacco".

At the close of trading on Wednesday, BAT, which operates in more than 200 countries, was valued at £82.6bn.

BAT declined to comment.