British American Tobacco (BATS) 21st Annual dbAccess Global Consumer Conference 2024 summary

Strategic transformation and smokeless ambition

• Targeting over 50% of revenue from smokeless products by 2035, leveraging a multi-category strategy and targeted investments.

• Focused on quality growth, balancing top-line expansion in new categories with margin improvement and disciplined resource allocation.

• Expanding into adjacent categories, including cannabis and wellbeing, as part of a long-term diversification plan.

• Building a collaborative, inclusive culture with revised company values and transparent communication, fostering innovation.

• Ongoing transformation towards a smokeless world remains a core objective.

Financial performance and guidance

• On track to deliver low single-digit revenue and profit growth for 2024, with stronger performance expected in H2 due to inventory normalization and innovation rollouts.

• Achieved breakeven in new categories two years ahead of target, with ongoing improvements in gross and operating margins.

• Announced share buybacks of £700m in 2024 and £900m in 2025, supported by strong cash generation and partial monetization of ITC stake.

• Revised leverage target to 2x-2.5x by end of 2024, aiming for further progress ex-Canada by 2026.

• Multi-year guidance targets 3%-5% revenue growth and mid-single-digit operating profit growth by 2026.

U.S. market and brand performance

• Stabilized U.S. market share and grew premium share through targeted interventions in Newport and Natural American Spirit.

• Implemented price laddering and data-driven revenue management to retain consumers and enhance brand resilience.

• Lucky Strike is the fastest-growing cigarette brand in the U.S., with increased sales force and analytics investment.

• Addressing challenges from illegal vapor products, expecting enforcement improvements in 2025 to support legal market share.

• Consumer confidence is gradually recovering, with expectations of further improvement as macroeconomic conditions ease.