British American Tobacco (BATS) H1 2026 earnings summary

Executive summary

• H1 2026 results met expectations, with revenue up 2.9% at constant FX and adjusted profit from operations up 3.5%, driven by strong U.S. multi-category and New Category performance.

• Smokeless product consumers increased by 4.1 million to 35 million, now representing 19.8% of group revenue.

• New Category contribution rose 55% at constant rates to £269m, with Modern Oral up 65.9% and strong Velo and Vuse performance.

• Resilient combustibles performance, especially in the U.S. and AME, supported by cost-saving initiatives.

• Transformation momentum is evident, with continued strong cash returns and on track for leverage corridor of 2.0-2.5x by year-end.

Financial highlights

• Group revenue: £12,235m (+2.9% constant FX, +1.4% reported); New Categories revenue: £1,928m (+18% constant FX).

• Adjusted profit from operations: £5,319m (+3.5%); adjusted operating margin: 43.7% (+30bps, as adjusted for Canada).

• Adjusted diluted EPS up 7.9% to 164.0p (as adjusted for Canada).

• Adjusted gross profit increased 3.8% to £8.3bn; category contribution margin (New Categories) up to 13.8%.

• Net cash from operating activities up 47.3% to £3,402m; free cash flow pre-dividend up 85.2% to £2,285m.

Outlook and guidance

• FY26 guidance reaffirmed: 3-5% revenue growth, mid-teens New Category revenue growth, 4-6% adjusted profit from operations growth (H2 weighted).

• Adjusted diluted EPS growth expected toward the middle of 5-8% guidance range.

• Operating cash flow conversion expected to exceed 95%; leverage to be within 2.0-2.5x corridor.

• Commitment to progressive dividend and £1.3bn share buy-back for FY26.

• Gross capital expenditure for 2026 expected at ~£750m.