GENEVA • British American Tobacco plc (BAT) said a legal defeat in Canada over the risks of smoking will hit its profit this year, after it set aside C$758 million (RM2.32 billion) to cover damages.
The Lucky Strike maker has held the sum in escrow following a 2015 decision by a lower court in Canada, where the company generates about 4% of its earnings.
The Canadian units of BAT, Philip Morris International Inc and Japan Tobacco Inc (JTI) lost an appeal last Friday in lawsuits seeking C$17 billion in total damages in Quebec.
The London-based company said yesterday it will take a charge against 2019 profit in the amount of the deposit. BAT’s Canadian unit plans to appeal to the country’s Supreme Court.
The Quebec Court of Appeal upheld a lower-court decision with minor changes, according to the ruling released last Friday.
The legal battle will probably continue for many years as it’ll likely be up to the Canadian Supreme Court to decide, BAT finance director Ben Stevens said on a results call last Thursday when asked to comment on the imminent decision.
If Big Tobacco loses this fight, it could bankrupt the industry in Canada, Adam Spielman, an analyst at Citigroup, has said.
Rothmans, Benson & Hedges Inc, the Canadian unit of Philip Morris, also said it plans to appeal.
Japan Tobacco said JTI-MacDonald Corp, the other defendant in the cases, is considering all options. — Bloomberg