British American Tobacco (BATS) Trading update summary

Financial performance and guidance

• On track to deliver full-year guidance with strong U.S. revenue and profit growth, supported by combustibles, Vapour, and Modern Oral segments; H1 performance expected to be stronger than H2 due to prior year comparators.

• New category revenue growth expected to accelerate to mid-teens for H1 and full year, led by Modern Oral and a return to growth in Vapour.

• Net debt to EBITDA leverage target of 2–2.5x expected by year-end, with over GBP 50 billion free cash flow targeted by 2030; strong cash generation supports progressive dividend and GBP 1.3 billion share buyback program.

• H2-weighted group profit anticipated, with Fit2Win program on track for GBP 600 million annualized savings by 2028.

• Confident in delivering mid-term targets: 3-5% revenue growth, 4-6% adjusted profit from operations, and 5-8% adjusted diluted EPS growth, with 2026 at the lower end of these ranges.

New Category and regulatory developments

• Modern Oral is the fastest-growing new category, with VELO gaining significant share and expected to triple industry revenue by 2030; Velo continues to deliver excellent global revenue and category contribution growth.

• FDA's prioritization guidance and enforcement expected to improve market access for reduced-risk products and support legal market growth.

• Vuse leads global Vapour value share, with U.S. Vapour expected to deliver double-digit revenue growth in H1 and full year; Vuse maintains global value share leadership, with strong U.S. performance and mid-single digit revenue growth expected.

• Modern Oral and Vapour portfolio rollouts scheduled for H2, leveraging regulatory pathways and science-led approach.

• Participation in Modern Oral PMTA pilot seen as a pathway to marketing authorizations for higher moisture products.

Regional and segment performance

• U.S. Modern Oral (VELO Plus) achieved 28.4% volume share and 23.1% value share, capturing all category value growth year-to-date.

• AME region leads Modern Oral at premium price, capturing over 60% of category growth; VELO Shift innovation gaining traction; AME shows resilient financial delivery, led by Brazil and Türkiye.

• Vapour recovery in the U.S. aided by competitor exit and state-level enforcement; European Vapour faces regulatory headwinds.

• Heated products (glo) face low double-digit revenue decline due to Japan inventory adjustments and competitive intensity, but expects H2 share improvement with new launches.

• Combustibles show resilient financial performance, offsetting volume declines with price mix and efficiency gains.