LONDON -- Updating the investment community on the progress of British American Tobacco’s (BAT) integration of Reynolds American Inc., a BAT executive said the process is going “smoothly.”
With only five months of contribution into the new entity, Winston-Salem, N.C.-based Reynolds American Inc. (RAI) “is performing very well with strong share growth in the second half of the year,” said Nicandro Durante, chief executive of London-based BAT. On a Feb. 22 investor call, Durante referred back to goals announced when the deal originally came to light, namely expected cost synergies of at least $400 million.
“I’m happy to report that savings are flowing through a little earlier than anticipated and we have already delivered more than $70 million in 2017,” Durante said. “This has been driven by the benefits of procurement, the implementation of BAT systems and process into the Reynolds production facilities, together with the integration of the coverage functions.”
He said they are on track to deliver targeted cost synergies by the end of 2020.
Durante also elaborated on the status of new-to-market product approvals from the U.S. Food and Drug Administration. He said BAT has a substantial equivalence, or SE, application submitted for a “carbon-tipped product” and is awaiting a final decision by mid-2018. It is also working on an SE application for a heated-tobacco product called “glo,” with a modified-risk application to follow soon afterward.
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