British American Tobacco (BATS) H2 2025 earnings summary

Executive summary

• FY25 results delivered at the top end of guidance, driven by strong momentum in smokeless products, Modern Oral consumer growth of 4.7 million to 34.1 million globally, and robust U.S. and AME performance.

• Achieved strongest growth acceleration to date, with resilient combustibles and excellent VELO performance across all regions.

• New Category contribution rose 77% to £442m, with premium innovations launched across all three New Categories.

• Continued progress on deleveraging, with leverage reduced to 2.55x and share buy-back increased to £1.3bn for FY26.

• Returned to revenue and profit growth in the U.S. for the first time since 2022, with a 30 basis point increase in combustibles value share.

Financial highlights

• Group revenue increased by 2.1% year-over-year to £25,610m; adjusted profit from operations up 2.3% to £11,279m; adjusted diluted EPS up 3.4% to 340.5p.

• Adjusted gross profit up 3.4% to £17.5bn; category contribution reached £442m.

• U.S. revenue increased 5.5%, adjusted profit up 5.9%, driven by strong combustibles.

• AME region revenue grew over 3%, adjusted operating profit up nearly 10%.

• APMEA revenue declined 7.2% due to headwinds in Bangladesh and Australia; adjusted profit down 17.9%.

• Operating margin stable at 44%; £1.2bn in productivity savings since 2023.

• Announced a 2% dividend increase and £1.3bn share buyback for FY26.

Outlook and guidance

• FY26 guidance: 3%-5% revenue growth, low double-digit New Category revenue growth, 4%-6% adjusted profit from operations growth, and 5%-8% adjusted diluted EPS growth.

• 2026 expected at lower end of guidance ranges, with profit performance second half weighted due to investment phasing and Fit to Win savings.

• Modern Oral and new categories expected to drive double-digit revenue growth; U.S. combustibles to deliver 0%-1% revenue growth medium term.

• Continued investment in premium innovations and productivity savings targeted at £2bn by 2030.

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