British American Tobacco writes down $31.5 billion as it shifts its business away from cigarettes

Shares of British American Tobacco tumbled Wednesday after the owner of Camel and American Spirit cigarettes took an impairment charge of about $31.5 billion, mainly related to its struggling U.S. cigarette brands with the number of people who smoke in steep decline.

In a financial update, London-based British American Tobacco said it is in the process of transforming its business from traditional, combustible products to “smoke-free” ones. Its goal is to get half its revenue from non-combustibles by 2035. Combustibles currently account for about 83% of its sales, according to the data firm FactSet.

In 2017, British American Tobacco bought Winston-Salem, North Carolina-based Reynolds American Inc. for about $49 billion in cash and stock.

Earlier this year, the Centers for Disease Control and Prevention released a survey that showed U.S. cigarette smoking in another all-time low, with 1 in 9 adults saying they were current smokers. In the mid-1960s, 42% of U.S. adults were smokers.

The preliminary survey findings sometimes are revised after further analysis.

The rate has been gradually dropping for decades, due to cigarette taxes, tobacco product price hikes, smoking bans and changes in the social acceptability of lighting up in public.

Cigarette smoking is a risk factor for lung cancer, heart disease and stroke, and it’s long been considered the leading cause of preventable death.

At the same time, the CDC survey showed that electronic cigarette use rose, to about 1 in 17 adults.

Those are the customers British American Tobacco is turning its focus to. The company plans to invest in its “new products” business, which includes vaporizers.

British American Tobacco shares fell $2.72, about 8.6%, to $28.82 in afternoon trading Wednesday. Other tobacco companies also...