British American Tobacco (BATS) H1 2025 earnings summary

Executive summary

• H1 2025 results were slightly ahead of expectations, driven by U.S. recovery, global Velo growth, and strong transformation momentum.

• Smokeless products now represent 18.2% of group revenue, with 1.4 million new consumers added, mainly via Modern Oral.

• U.S. business returned to revenue and profit growth for the first time since 2022, led by combustibles and Modern Oral.

• Digital transformation and innovation, including launches like Velo Plus, glo Hilo, and Vuse Ultra, are key growth drivers.

• Share buyback increased by £200m to £1.1bn for FY25, reflecting confidence in sustainable transformation.

Financial highlights

• Group revenue up 1.8% year-over-year at constant currency, at the upper end of the 1%-2% guidance range.

• Adjusted profit from operations up 1.9% at constant FX; adjusted diluted EPS increased 1.7% to 162.1p.

• Modern Oral revenue grew over 40% at constant FX; New Category revenue up 2.4% at constant FX.

• U.S. revenue up 3.7% at constant FX, with strong growth in Modern Oral and combustibles.

• AME revenue up 3.5% at constant FX, led by Modern Oral; APMEA revenue down 4.8% at constant FX due to regulatory headwinds.

Outlook and guidance

• Full-year revenue expected at the top end of 1%-2% guidance; EBIT/profit from operations growth guidance maintained at 1.5%-2.5%.

• New Category revenue growth expected to move into mid-single digits for the full year.

• Continued investment in innovation and new categories, with incremental investments to fuel growth into 2026.

• Targeting 3%-5% revenue growth and 4%-6% operating profit growth midterm, excluding Bangladesh and Australia headwinds.

• Net finance costs expected at c.£1.8bn, with gross capital expenditure for 2025 at ~£650m.