REG - British Amer.Tobacco - 2025 H2 Pre-Close Trading Update

British American TobaccoAnnouncement

Yesterday 07:00

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RNS Number : 7276K  British American Tobacco PLC  09 December 2025

9 December 2025

On track for FY25 delivery; Reaffirming 2026 guidance and announcing a £1.3bn
share buy-back

·      Now expect c.2% revenue and adjusted profit from operations(1)
growth for FY25

·      New Category revenue growth accelerating to double-digit in H2,
driving mid-single digit for FY

·      Strong U.S. revenue and profit(2) momentum, driven by ongoing
combustibles delivery and an excellent Velo Plus performance, which is on
track for full-year profitability(3)

·      Early signs of Federal and State enforcement actions tackling U.S.
illicit Vapour products support recent Vuse volume and revenue improvement

·      Velo driving strong global growth in Modern Oral, the fastest
growing New Category

·      AME delivery remains strong; APMEA impacted by ongoing fiscal and
regulatory headwinds in Bangladesh and Australia

·      Further acceleration in New Category contribution(3), in line with
our Quality Growth approach

·      Confident in sustainably delivering mid-term growth algorithm from
2026 (+3-5% revenue, +4-6% APFO(1) and +5-8% adj. diluted EPS(1)), with 2026
performance expected at the lower end of the range

·      Strong cash generation and balanced capital allocation; on track to
reduce leverage(4) to within 2.0-2.5x by end 2026, alongside progressive
dividends and sustainable share buy-backs - FY26: £1.3bn

Tadeu Marroco, Chief Executive

"Full-year delivery remains on track.

I am particularly pleased with our momentum in the U.S., the world's largest
nicotine value pool. Strengthened combustibles performance and enhanced
commercial execution reinforce our future confidence. Velo Plus continues to
deliver excellent results, reaching number 2 in volume and value share, with
profitability(3) on-track for full year.

Recent Vuse volume and revenue improvement in the U.S. is encouraging,
although the Vapour category continues to be impacted by illicit
proliferation. Over time, we believe Vuse is well positioned to benefit from
stronger Federal and State level enforcement.

Group New Category revenue is accelerating to double-digit growth in H2.

Velo continues to grow strongly in all three regions, in the fastest growing
New Category with the lowest risk(*†) profile, relative to cigarettes.

We remain focused on establishing glo Hilo as a premium offering in the
largest Heated Products profit pools, across three priority markets in H2.
Further roll-outs are planned in 2026.

Vuse Ultra, our premium vaping platform, is driving encouraging early results
in priority launch markets of Canada, Germany and France. Premium "Vapour Done
Right" is a significant, untapped segment for further value creation.

While there is more to do, we continue to prioritise investment in our most
profitable markets and categories, driving accelerating New Category
contribution(3), in line with our Quality Growth approach. We remain confident
in delivering our mid-term algorithm next year.

Our strong operating cash conversion is driving increasing financial
flexibility as we reduce leverage(4) towards our 2.0-2.5x target range. I
remain committed to delivering sustainable shareholder value supported by
robust cash returns, progressive dividends and sustainable share buy-backs,
and I am pleased to announce today that we are increasing our buy-back
programme to £1.3bn for 2026."

Our outlook is underpinned by three key areas, where momentum continues:

1. Combustibles: Resilient financial performance driven by the U.S. and AME

·      Group value share in top markets(5) flat, volume share -10bps

·      U.S. value share +20bps; volume share flat

·      Improving H2 Group revenue and category profit(1) performance
driven by the U.S.

·      Resilient AME financial performance led by Brazil, Türkiye and
Mexico

·      APMEA performance impacted by material fiscal and regulatory
headwinds in Bangladesh and Australia (c.-1% on revenue and c.-2% on APFO(1)
growth, as previously guided)

2. H2 New Category revenue growth acceleration, driven by Velo Plus and recent
U.S. Vapour improvement

2.1 Velo: Clear category leadership in AME; excellent Velo Plus performance in
the U.S.

·      Volume share +460bps to 15.9% of Total Oral and +590bps to 31.8% of
Modern Oral in top markets(6)

·      Strong double-digit revenue growth, driven by industry growth and
volume share gains

·      Excellent U.S. performance with Velo Plus driving volume share of
Modern Oral +920bps to 15.6% and triple-digit revenue growth; expect positive
FY category contribution(3)

·      Continued leadership in AME, with strong financial delivery

2.2 glo: Broadly flat FY revenue growth, impacted by competitive activity and
resource reallocation ahead of glo Hilo launches

·      Volume share in top markets(7) -1.2ppts, impacted by Japan, which
remains highly competitive alongside the continued phase-out of our legacy
super-slims platform

·      AME volume share -60bps, with continued share growth in Czech
Republic, Portugal and Spain, offset by the impact of resource allocation
decisions in other key markets ahead of glo Hilo roll-out

·      Establishing glo Hilo in the premium segment with H2 launches -
Japan (Sept), Poland (Oct) and Italy (Nov)

2.3 Vuse: Improved H2 revenue performance driven by recent U.S. improvement

·      Continued global leadership in tracked channels, with value share
in top markets(8) +10bps, driven by the U.S. +70bps, supported by early signs
of increased Federal and State enforcement

·      AME value share -50bps driven by illicit Vapour in Canada

·      Encouraging early performance of premium innovation Vuse Ultra in
Canada, Germany and France

·      Expect FY revenue to be down high-single digit (vs. -13% in H1) due
to illicit headwinds in U.S. and Canada, re-prioritised resource allocation
and market exits

3. Continued strong cash delivery, and balanced capital allocation

·      On track to deliver another year of operating cash flow
conversion(9) in excess of 95% in FY25, reflecting strong cash discipline and
a clear focus on returns

·      We expect to be within our 2.0-2.5x adjusted net debt/adjusted
EBITDA(4) target range by end 2026, together with a progressive dividend and
share buy-backs - increased £1.3bn announced for FY26

Technical guidance for FY25:

·      Global tobacco industry volume expected to be down c.2%

·      c.2% Group revenue growth at constant rates

·      Mid-single digit New Category revenue growth at constant rates

·      c.2% adjusted profit from operations growth(1) at constant rates,
incl. a c.1% transactional FX(10) headwind

·      c.3% translational FX(10) headwind on adjusted profit from
operations(1) and c.4% on adjusted diluted EPS(1)

·      Net finance costs(1) of c.£1.8bn, subject to FX and interest rate
volatility

·      Operating cash flow conversion(9) in excess of 95%, gross capital
expenditure in 2025 of c.£650 million

·      Continue to deleverage(4) to our 2.0-2.5x adjusted net
debt/adjusted EBITDA target range by end 2026

 

For further information, please contact:

 

Media Centre

+44 (0) 20 7845 2888 (24 hours) | press_office@bat.com
(mailto:press_office@bat.com) | @BATplc (https://twitter.com/BATplc)

Investor Relations
ir_team@bat.com (mailto:ir_team@bat.com)

Victoria Buxton: +44 (0)20 7845 2012

Amy Chamberlain: +44 (0)20 7845 1124

John Harney: +44 (0)20 7845 1263

 

Webcast and Conference call - The conference call will begin at 8.30am (GMT)

You can access the online audio webcast
here (https://stream.brrmedia.co.uk/broadcast/68a4a25490093500134ea7b8)
. You can also listen via conference call by dialling the numbers below. Quote the password 'BAT - Trading Update' when prompted by the operator.

UK Toll-Free: 0808 109 0700

UK-Toll: +44 (0) 33 0551 0200

South Africa Toll-Free: 0800 980 512

USA Toll-Free: 866 580 3963

USA Toll: +1 786 697 3501

 

A playback facility for the conference call will be available online via:
www.bat.com (https://www.bat.com/investors-and-reporting/results-centre) .

Financial guidance and trading update expectations based on constant rates:
Measures are calculated based on the prior year's exchange rate, removing the
potentially distorting effect of translational foreign exchange on the Group's
results. The Group does not adjust for normal transactional gains or losses in
profit from operations which are generated by exchange rate movements.

Share data YTD September 2025 average share growth vs. FY24 average.

This announcement also contains New Category contribution, adjusted profit
from operations, adjusted EBITDA, adjusted net debt, adjusted net finance
costs and adjusted diluted earnings per share, all of which are before the
impact of adjusting items and which are reconciled from profit from
operations, profit/(loss) for the year, borrowings, net finance costs, and
diluted earnings per share. See "Note on Non-GAAP Measures".

(1) ( )Adjusted Profit from Operations (adjusted for Canada): Profit from
operations before the impact of adjusting items on an "adjusted for Canada"
basis.

Net finance costs (adjusted for Canada): Net finance costs on an "adjusted for
Canada" basis.

Adjusted diluted EPS (adjusted for Canada): Diluted earnings per share before
the impact of adjusting items and the performance of Canada (where applicable,
and excluding New Categories), presented at the prior year's rate of exchange.

Category contribution (adjusted for Canada): Profit from operations before the
impact of adjusting items and translational foreign exchange, having allocated
costs that are attributable to a product category and presented adjusting for
the performance of Canada (where applicable, and excluding New Categories) in
£ (at constant rates).

Adjusted for Canada: Certain adjusted measures, including adjusted profit from
operations, category contribution, net finance costs, adjusted diluted
earnings per share, leverage, adjusted net debt and adjusted EBITDA, are also
presented on an "adjusted for Canada" basis, reflecting the removal of 100% of
adjusted profit from operations of our Canadian business, excluding New
Categories, from both 2024 and 2025 results, to remove the distorting effect
of the Canadian results, as from 29 August 2025, the date all of the Group's
outstanding tobacco litigation in Canada was settled, annual payments based on
a percentage (initially 85%, reducing over time) of the Group's net income
after taxes, based on amounts generated in Canada from all sources, excluding
New Categories, will be paid out by the Group until the aggregate settlement
amount is paid. Due to the initial uncertainty of the timing of the
implementation of the settlement, we have removed 100% of the results of the
Canadian business, excluding New Categories, for the periods under review
here.

(2) Adjusted Profit from Operations: Profit from operations before the impact
of adjusting items.

(3) New Category profitability at category contribution level: Profit from
operations before the impact of adjusting items and translational foreign
exchange, having allocated costs that are directly attributable to New
Categories.

(4) Leverage refers to the ratio of adjusted net debt to adjusted EBITDA,
excluding cash and investments held at fair value, on an "adjusted for Canada"
basis.

Adjusted net debt is not a measure defined by IFRS. Adjusted net debt is total
borrowings, including related derivatives, less cash and cash equivalents and
current investments held at fair value, excluding the impact of the
revaluation of Reynolds American Inc. acquired debt arising as part of the
purchase price allocation process.

 

Adjusted EBITDA is not a measure defined by IFRS. Adjusted EBITDA is profit
for the year before net finance costs/income, taxation on ordinary activities,
depreciation, amortisation, impairment costs, the Group's share of post-tax
results of associates and joint ventures, and other adjusting items, on an
"adjusted for Canada" basis.

(*) Based on the weight of evidence and assuming a complete switch from
cigarette smoking. These products are not risk free and addictive.

(†) Our products as sold in the U.S., including Vuse, Velo, Grizzly, Kodiak,
and Camel Snus, are subject to FDA regulation and no reduced-risk claims will
be made as to these products without agency clearance. See page 69 of Omni
(available on our website) for information on risk continuum model of tobacco
and nicotine products.

(5) Top Cigarette markets: U.S. - Circana Non-Syndicated RSD, Germany -
NielsenIQ share of international manufacturers, Japan - CVS, Romania -
NielsenIQ share of international manufacturers, Brazil - Scanntech, Mexico -
NielsenIQ, Pakistan - Retail Access. These seven markets cover an estimated
c.60% of Cigarette industry revenue in 2024.

(6) Top Modern Oral markets: U.S. - Circana Non-Syndicated RSD, Sweden -
NielsenIQ, Denmark - NielsenIQ, Norway - NielsenIQ, Switzerland - IMS, UK -
NielsenIQ, Poland - NielsenIQ. These seven markets cover an estimated c.90% of
total industry Modern Oral revenue in 2024.

(7) Top HP markets: Japan - CVS-BC, South Korea - CVS, Italy - NielsenIQ,
Germany - NielsenIQ, Greece - NielsenIQ, Poland - NielsenIQ, Romania -
NielsenIQ, Czech Republic - NielsenIQ, Spain - Logista RA, Portugal - Logista
RA. These ten markets cover an estimated c.80% of total industry HP revenue in
2024.

(8) Top Vapour markets: U.S. - Circana Non-Syndicated RSD, Canada - Scan Data,
UK - NielsenIQ, France - Logista RA, Germany - NielsenIQ, Poland - NielsenIQ,
Spain - Logista RA. These seven markets cover an estimated c.80% of global
closed systems consumables industry revenue in 2024.

(9) Operating Cash Conversion: Net cash generated from operating activities
before the impact of adjusting items and dividends from associates and
excluding trading loans to third parties, pension short fall funding, taxes
paid and net capital expenditure, as a proportion of adjusted profit from
operations.

(10) Based on current exchange rates of USD/GBP 1.3343 as at 5 December 2025.

 

Share growth refers to volume share for HP and Modern Oral and value share for
Vapour. As used herein, volume share refers to the estimated retail sales
volume of the product sold as a proportion of total estimated retail sales
volume in that category and value share refers to the estimated retail sales
value of the product sold as a proportion of total estimated retail sales
value (rechargeable closed systems consumables and disposables) in that
category. Please refer to the 2024 Annual Report on Form 20‐F for a full
description of these measures, together with a description of other Key
Performance Indicators (KPIs), on pages 391 and 392. Industry and global
revenue refer to the total industry revenue in the markets in which we are
present.

New Categories comprises Heated Products (HP), Vapour and Modern Oral.

Note on Non-GAAP Measures

This announcement contains several forward-looking non-GAAP measures used by
management to monitor the Group's performance. For the non-GAAP information
contained in this announcement, no comparable GAAP or IFRS information is
available on a forward-looking basis and our forward-looking revenue and other
components of the Group's results, including adjusting items, cannot be
estimated with reasonable certainty due to, among other things, the impact of
foreign exchange and adjusting items, which could be significant, being highly
variable. As such, no reconciliations for this forward-looking non-GAAP
information are available and we are unable to: present revenue before
presenting constant currency revenue; or present profit from operations
before presenting adjusted profit from operations at constant rates, as
adjusted for Canada; or present diluted EPS before presenting adjusted EPS at
constant rates as adjusted for Canada; or present profit/(loss) for the year
before presenting adjusted EBITDA at constant rates as adjusted for Canada.

This announcement also contains New Category contribution, adjusted profit
from operations, adjusted EBITDA, adjusted diluted earnings per share,
adjusted net debt and adjusted net finance costs, all of which are before the
impact of adjusting items and which are reconciled from profit from
operations, profit/(loss) for the year, diluted earnings per share, borrowings
and net finance costs.

 

Adjusting items, as identified in accordance with the Group's accounting
policies, represent certain items of income and expense which the Group
considers distinctive based on their size, nature or incidence. These include
significant items in, profit from operations, profit/(loss) for the year,
diluted earnings per share, net finance costs, which individually or, if of a
similar type, in aggregate, are relevant to an understanding of the Group's
underlying financial performance. Although the Group does not believe that
these measures are a substitute for IFRS measures, the Group does believe such
results excluding the impact of adjusting items provide additional useful
information to investors regarding the underlying performance of the business
on a comparable basis.

The Group's Management Board reviews a number of our IFRS and non‐GAAP
measures for the Group and its geographic segments at constant rates of
exchange. This allows comparison of the Group's results, had they been
translated at the previous year's average rates of exchange. The Group does
not adjust for the normal transactional gains and losses in operations that
are generated by exchange movements. Although the Group does not believe that
these measures are a substitute for IFRS measures, the Group does believe that
such results excluding the impact of currency fluctuations year‐on‐year
provide additional useful information to investors regarding the operating
performance on a local currency basis.

Another non-GAAP measure which the Group uses and that is contained in this
announcement is operating cash conversion.  Management reviews operating cash
conversion as an indicator of the Group's ability to turn profits into cash.

Certain adjusted measures, including adjusted profit from operations, category
contribution, net finance costs, adjusted diluted earnings per share,
leverage, adjusted net debt and adjusted EBITDA, are also presented on an
"adjusted for Canada" basis, reflecting the removal of 100% of adjusted profit
from operations of our Canadian business, excluding New Categories, from both
2024 and 2025 results, to remove the distorting effect of the Canadian
results, as from 29 August 2025, the date all of the Group's outstanding
tobacco litigation in Canada was settled, annual payments based on a
percentage (initially 85%, reducing over time) of the Group's net income after
taxes, based on amounts generated in Canada from all sources, excluding New
Categories, will be paid out by the Group until the aggregate settlement
amount is paid. Due to the initial uncertainty of the timing of the
implementation of the settlement, we have removed 100% of the results of the
Canadian business, excluding New Categories, for the periods under review
here.

The Group's Management Board regularly reviews the measures used to assess and
present the financial performance of the Group and, as relevant, its
geographic segments, and believes that these measures provide additional
useful information to investors. Please refer to the 2024 Annual Report on
Form 20‐F, pages 391 to 410, for a full description of each measure
alongside non-financial measures.

Forward looking statements

References in this announcement to 'BAT', 'Group', 'we', 'us' and 'our' when
denoting opinion refer to British American Tobacco p.l.c. (BAT PLC) and when
denoting business activity refer to BAT Group operating companies,
collectively or individually as the case may be.

 

This announcement does not constitute an invitation to underwrite, subscribe
for, or otherwise acquire or dispose of any BAT PLC shares or other
securities. This announcement contains certain forward-looking statements,
including "forward-looking" statements made within the meaning of the U.S.
Private Securities Litigation Reform Act of 1995. These statements are often,
but not always, made through the use of words or phrases such as "believe,"
"anticipate," "could," "may," "would," "should," "intend," "plan,"
"potential," "predict," "will," "confident in", "expect," "estimate,"
"project," "positioned," "strategy," "outlook", "target" and similar
expressions. In particular, these forward-looking statements include
statements regarding (i) the Group's expectations with respect to growth of
revenue and adjusted profit from operations in the second half and full year
of 2025 at the Group, segment and category levels, (ii) the Group's
expectations with respect to New Category revenue and profitability on a
category contribution level in the second half and full year of 2025, (iii)
the Group's expectations with respect to the mid-term algorithm in 2026, (iv)
the Group's expectations with respect to glo Hilo launches in the second half
of 2025, (v) the Group's expectations with respect to Vuse revenue in the full
year of 2025, (vi) statements under the heading "Continued strong cash
delivery, and balanced capital allocation", (vii) statements regarding robust
cash returns, (viii) statements regarding the progressive dividend and
sustainable share buy-back, including £1.1bn in 2025 and £1.3bn in 2026 and
(ix) statements under the heading "Technical guidance for FY25". These include
statements regarding our intentions, beliefs or current expectations
concerning, amongst other things, our results of operations, financial
condition, liquidity, prospects, growth, strategies and the economic and
business circumstances occurring from time to time in the countries and
markets in which the Group operates.

 

All such forward-looking statements involve estimates and assumptions that are
subject to risks, uncertainties and other factors. It is believed that the
expectations reflected in this announcement are reasonable, but they may be
affected by a wide range of variables that could cause actual results and
performance to differ materially from those currently anticipated.

 

Among the key factors that could cause actual results to differ materially
from those projected in the forward-looking statements are uncertainties
related to the following: the impact of competition from illicit trade; the
impact of adverse domestic or international legislation and regulation; the
inability to develop, commercialise and deliver the Group's New Categories
strategy; the impact of supply chain disruptions; adverse litigation, external
investigations and dispute outcomes and the effect of such outcomes on the
Group's financial condition; the impact of significant increases or structural
changes in tobacco, nicotine and New Categories related taxes; translational
and transactional foreign exchange rate exposure; changes or differences in
domestic or international economic or political conditions; the ability to
maintain credit ratings and to fund the business under the current capital
structure; the impact of serious injury, illness or death in the workplace;
adverse decisions by domestic or international regulatory bodies; direct and
indirect adverse impacts associated with Climate Change; direct and indirect
adverse impacts associated with Circularity; and Cyber Security risks caused
by the heightened cyber-threat landscape, the increased digital interactions
with consumers and changes to regulation.

 

Past performance is no guide to future performance and persons needing advice
should consult an independent financial adviser. The forward-looking
statements reflect knowledge and information available at the date of
preparation of this announcement and BAT undertakes no obligation to update or
revise these forward-looking statements, whether as a result of new
information, future events or otherwise. Readers are cautioned not to place
undue reliance on such forward-looking statements.

 

No statement in this announcement is intended to be a profit forecast and no
statement in this announcement should be interpreted to mean that earnings per
share of BAT PLC for the current or future financial years would necessarily
match or exceed the historical published earnings per share of BAT PLC.

 

Additional information concerning these, and other factors can be found in BAT
PLC filings with the U.S. Securities and Exchange Commission ("SEC"),
including the Annual Report on Form 20-F, filed on 14 February 2025, and
Current Reports on Form 6-K, which may be obtained free of charge at the SEC's
website, http://www.sec.gov and BAT's website, http://www.bat.com.

 

 

 

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