British American Tobacco (BATS) H2 2025 earnings summary

Executive summary

• 2025 results delivered at the top end of guidance, driven by strong growth in smokeless products, robust U.S. and AME performance, and resilient combustibles.

• Added 4.7 million smokeless consumers, reaching 34.1 million, mainly via Modern Oral; smokeless now 18.2% of group revenue.

• New Category contribution rose 77% to £442m, with revenue up 7% and Modern Oral up 48%, offsetting a 9% decline in Vapor.

• Premium innovations launched across all three New Categories, including VELO Shift, Vuse Ultra, and glo Hilo.

• Continued deleveraging, with leverage reduced to 2.55x and share buyback increased to £1.3bn for FY26.

Financial highlights

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

• Adjusted diluted EPS rose 3.4% to 340.5p; operating margin stable at 44%.

• Adjusted gross profit up 3.4% to £17.5bn; free cash flow pre-dividend at £4,048m.

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

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

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 the lower end of these ranges, with profit performance second half weighted.

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

• Fit to Win program to deliver £600m annualized savings by 2028.

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