British American Tobacco (BATS) investor relations material

Strategic direction and transformation

• Horizon 2030 strategy targets a predominantly smokeless business by 2035, anchored in Modern Oral, Vapour, and Heated Products, with a focus on consumer-led innovation, digital transformation, and sustainability.

• Seven strategic levers drive growth: U.S. as cornerstone, Modern Oral leadership, combustibles as core, New Category inhalation, Beyond Nicotine, Tobacco Harm Reduction, and world-class capabilities.

• Modern Oral (Velo) is positioned as the fastest-growing brand in the fastest-growing category, aiming to double the consumer base and triple industry revenue by 2030, with 40% global volume share and 69% value share in Europe.

• Combustibles remain a vital value pool and core revenue driver, with a refined strategy targeting 20 key markets, #1 global revenue position, and strong market share in top 40 markets.

• Beyond Nicotine is being developed as a future growth option, focusing on wellbeing, stimulation, and cannabis, with £256m ARR in cannabis and £20m ARR in W&S.

Financial guidance and performance targets

• 2030 financial algorithm targets 3%-5% sustainable group revenue growth, 4%-6% adjusted profit growth, and 5%-8% adjusted diluted EPS growth at constant rates.

• Over £50bn in free cash flow expected between 2024 and 2030, with £2bn productivity savings and £700m annualised Fit2Win benefits by 2028.

• Modern Oral expected to deliver £4.3bn in revenue by 2030, with Velo aiming for close to 30% CAGR, outpacing industry growth.

• New Categories targeted for mid-teens revenue growth and at least 30% contribution margin by 2030, with profitability already ahead of combustibles in established markets.

• Target leverage ratio of 2.0-2.5x by end 2026, supported by strong cash generation and disciplined capital allocation.

Innovation, digital, and AI capabilities

• AI and digital are fully embedded across R&D, marketing, and operations, accelerating innovation, reducing time to market, and enhancing productivity.

• Strategic partnerships with Microsoft and Accenture have enabled 85% cloud hosting, advanced data platforms, and the rollout of ChatBAT, democratizing AI access for all employees.

• AI-driven R&D tools like Vega and BlendAI have doubled prototyping success rates and reduced simulation times from months to minutes.

• AI-enabled marketing and trade tools have cut concept testing from weeks to days and increased content production efficiency by up to 90%.

• Over 1,000 AI agents are in daily use, with ambitions to double adoption and maintain 80% daily active usage by 2027.