- Jack Bowles steps down after four years
- Finance director Tadeu Marroco to become CEO
- Shares down 18% year-to-date
British American Tobacco (BATS) has surprised the market with the news that Jack Bowles has left as chief executive with immediate effect after just four years in the job. He has been replaced by finance director Tadeu Marroco.
Bowles launched the company’s ‘A Better Tomorrow’ strategy in 2019 which focused on alternative products to traditional cigarettes, including ones deemed to be less risky from a health perspective. He also oversaw the return of more than £20 billion to shareholders through dividends and share buybacks.
In a statement to the stock market, it is implied that Bowles was not the right man to take the business to the next level.
Russ Mould, investment director at AJ Bell, said: ‘It’s never a good look 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 right in the business.
‘The fact British American Tobacco has promoted its finance director to the CEO role provides some comfort that the new leader already knows the business inside out. However, it raises a lot of questions as to why the change has happened.
‘Unlike many companies in this situation, we haven’t had any major clues for problems behind closed doors for British American Tobacco. There have been no profit warnings or activist investors calling for change. The only high-profile calls from shareholders have been a request by GQG Partners to move its stock listing from London to the US in the hope of getting a higher valuation.’
Marroco joined British American Tobacco in 1992 and was appointed to the board in 2019 as group finance director. He has also served on the management board since 2014, with previous roles including regional director for Europe and North Africa, and group transformation director.
Luc Jobin, chair of British American Tobacco, said regarding Marroco’s appointment: ‘In considering succession, the board recognised Tadeu's outstanding track record of developing teams that deliver on our transformation alongside a consistent focus on strong execution and financial performance.
‘We are confident that under his leadership we will further strengthen our relationships with key stakeholders and continue to build “A Better Tomorrow” and deliver long-term sustainable value for our shareholders.’
Javed Iqbal, currently director, digital and Information, will take on the role of interim group finance director until a permanent successor has been appointed.
Shares in British American Tobacco were marginally higher in morning trade at £27.12. However, year-to-date the stock is trading 18% lower.
Mould at AJ Bell said: ‘A lot of investors have 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 new ways to attract investors and win over sceptics.’
DISCLAIMER: AJ Bell is the publisher of Shares magazine. Daniel Coatsworth who edited this article owns shares in AJ Bell.
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