REG - British Amer.Tobacco - AGM Statement

British American TobaccoAnnouncement

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RNS Number : 6014A  British American Tobacco PLC  15 April 2026

AGM 2026

Chair's address

British American Tobacco p.l.c.

15 April 2026

 

WELCOME AND INTRODUCTION

 

Good morning, ladies and gentlemen. I am delighted to welcome you to our 2026
Annual General Meeting. All of your Directors are here today.

 

EXTENSION OF TENURE

 

It is a pleasure to see so many of you here.

 

As many of you know, in February, the Board announced its decision to extend
my tenure as Chair for two more years, while the search for the right
candidate continues.

 

Let me assure you that the Board remains fully committed to maintaining high
standards of corporate governance, and recognises the importance of Board
refreshment.

 

An extension of my tenure, beyond July 2026, represents a departure from the
nine‑year recommendation set out in the UK Corporate Governance Code.

 

However, the Board concluded that maintaining consistent leadership is in the
best interests of the Group and our shareholders during this important phase
of our transformation.

 

In a short while, you will have the opportunity to ask questions. And
following that, we will move to the formal business of the meeting.

 

But first, let me take a few minutes to reflect on 2025 and the progress we
are making in transforming BAT.

 

REFLECTIONS ON 2025

 

Despite a challenging external environment, BAT delivered what it set out to
do in 2025. It was a year of deployment, with tight execution against our
strategy. As a result:

•  We delivered at the top end of our guidance;

•  In the U.S., our business returned to growth, with sustained momentum in
combustibles and excellent results from Velo Plus;

•  The number of consumers choosing our Smokeless(1) products increased by
more than 15% year-on-year, taking us closer to our target of 50 million
consumers by 2030;

•  Our New Categories business delivered a significant improvement in
category contribution, as we focused on driving sustainable quality revenue
growth; and

•  We returned £6.3 billion to shareholders through dividends and share
buy-backs - with approximately £34 billion returned to shareholders since
2020.

 

In our 2025 combined annual and sustainability report, shareholders will have
seen references to Fit2Win. This is a transformational three-year programme
that is re-inventing our business. Fit2Win is designed to ensure that BAT is
future-fit to capitalise on the increasingly dynamic and digital consumer
landscape. This means we will be sharper, faster and more data-driven, with
the right capabilities for the future.

 

And I am confident in that future because it is grounded in real progress and
underpinned by six core capabilities that will sustain our transformation.
 

 

The first is our advanced consumer insights and foresights.

 

As one of the most established businesses in the tobacco and nicotine
industry, we truly understand adult nicotine consumers(2) and their diverse
preferences.

 

By using AI and data analytics, together with our extensive multi-category
experience, we believe we can anticipate trends and develop innovative
products to satisfy these preferences at pace.

 

The second capability is our science and stewardship.

 

When it comes to our New Category products, we have an excellent evidence
base, backed by decades of research, hundreds of peer-reviewed studies, and
thousands of patents.

 

The weight of evidence is compelling, as it demonstrates that our Smokeless
products have significantly lower toxicant levels compared to cigarettes.
 

 

We have invested heavily in our science capabilities. Together with our
brand‑building strength and global reach, we believe we have a
well‑balanced portfolio that can meet a wide range of consumer preferences,
across markets and moments.

 

To maintain this balance and provide adult nicotine consumers with a range of
enjoyable reduced-risk*† products, we are scaling our innovation at the
speed our transformation demands.

 

The third is our unique R&D ecosystem, which we have enhanced by building
four state-of-the-art innovation centres and leveraging the strengths of our
exclusive strategic partners.

 

This, alongside our decades of experience of creating great products for adult
consumers, enables us to accelerate our innovation pipeline, which remains
core to our growth.

 

The fourth capability is our international distribution network, which is
unparalleled in its reach.

 

Our brands are available to adult consumers in more than 140 countries, across
millions of outlets. Most of these outlets are in convenience and traditional
channels, and this is an incredibly tough model to replicate, giving us a
unique vantage point and competitive edge.

 

We have also invested in technologies, including AI and machine learning, to
help us get our products to the right place at the right time.

 

Our vision to Build a Smokeless World is absolute, and it is fuelled by our
ambition to reduce the health impact of our business. But we recognise that
our efforts alone are not enough.

 

A collaborative approach with policymakers, regulators and public health
officials is crucial to achieve the right frameworks that can encourage adult
smokers, who would otherwise continue to smoke, to switch to less risky (*†)
alternatives.

 

The fifth is our regulatory engagement and Tobacco Harm Reduction. Our
approach is proactive, and our efforts are relentless. Engaging in an
evidence-based dialogue with key stakeholders, including governments, health
authorities and regulators, is critical to help shape sensible and
proportionate regulation.

 

The evidence alone is persuasive. Countries like Sweden, the UK and the U.S.
are demonstrating what is possible. When Tobacco Harm Reduction is embraced,
smoking rates fall faster(3,4,5).

 

This proves that when adult smokers, who would otherwise continue to smoke,
have access to reduced‑risk(*†) alternatives, many choose to switch
completely.

 

But we have also seen what happens when regulation misses the mark.

 

In Australia, Vapour products require a prescription. In Brazil, they're
banned outright. In both countries illicit trade is thriving and smoking rates
are rising.

 

This should concern everyone. It threatens progress, and more importantly, it
undermines opportunities for harm reduction and denies adult consumers access
to Smokeless products.

 

The regulatory hurdles are real, but so is the evidence - and the progress. It
is time to separate fact from fiction.

 

That's why our voice - backed by science and our products - matters. And this
is precisely why we created Omni - our dynamic evidence-based manifesto for
change, and our go-to authority on Tobacco Harm Reduction.

 

We know that lasting change is only possible through genuine dialogue, with a
clear view of the facts. Omni enables those crucial societal conversations
between stakeholders, while demonstrating how science and innovation can
accelerate the journey to a Smokeless World.

 

And finally, the sixth is our digital and AI capability, which we are
strengthening at pace to enable greater agility, efficiency and clarity.
 

 

Our glo Hilo and Vuse Ultra devices are prime examples of this. We have
enhanced the consumer experience, with a fully-connected digital ecosystem,
creating products that keep pace with evolving consumer preferences in an
increasingly digital world.

 

Another example is our investment in age-estimation technology. We know that
underage access is a critical issue facing the industry.

 

Our position is clear: no underage person should use tobacco or nicotine
products. Last year, we launched age-estimation technology pilots in seven
markets(‡), enabling more than 38,000 age checks.

 

We're also engaging with policymakers and advocating for appropriate retail
licencing solutions.

 

This, together with our responsible thought leadership and responsible
marketing practices, is how we are leading from the front and calling for
clear guardrails to protect the underaged.

 

We are also advancing our commercial execution, deploying next-generation
digital platforms and AI-driven capabilities that support accuracy, compliance
and operational excellence.

 

Ultimately, BAT is a company with a clear purpose, driven by its ambition to
be a predominantly Smokeless business by 2035.

 

With a global multi-category strategy and significant opportunities ahead, the
Board believes the business is in a strong position to drive future growth.
 

 

OUTLOOK

Now, let me move to our outlook.

 

Our transformation is driving us ever closer towards our purpose of A Better
Tomorrow™, for our consumers, investors, employees and society alike. And
this is one of the reasons I was delighted to stay on as Chair of the Board.
 

 

We enter 2026 with accelerating momentum, powered by a strengthened innovation
pipeline, deep strategic partnerships and growing confidence in our future-fit
capabilities.

 

This progress underpins our confidence in sustainably delivering our mid-term
algorithm of:

 

•  3-5% revenue growth;

•  4-6% adjusted profit from operations** growth; and

•  5-8% adjusted, diluted EPS** growth.

 

We continue to expect performance at the lower end of our guided ranges this
year, reflecting the time required to stabilise the APMEA region and our
continued investment behind premium innovation roll-outs.

 

We also expect profit delivery to remain second-half weighted, driven by the
phasing of New Category investment and build of Fit2Win savings through the
year.

 

At current rates, we now expect a translational FX headwind on adjusted
diluted EPS** in the range of 2% to 3% for the half-year and the full-year.
 

 

Returning to this mid‑term algorithm marks a major milestone in our
transformation journey and reinforces the strength and resilience of our
strategy. However, complexity and volatility continue to shape the world
around us.

 

We have activated comprehensive Business Continuity Plans to mitigate
potential disruption, and we are closely monitoring the situation in the
Middle East as it evolves. As of today, the conflict is not currently having a
significant impact on the Group's business.

 

BAT continues to be highly cash generative, and we expect to deliver over £50
billion of free cash flow between 2024 and 2030.

 

We maintain a disciplined approach to capital allocation, which the Board
reviews regularly, and we are committed to strong shareholder returns.

 

Key elements include:

 

•  Continued investment in our transformation;

•  Balancing deleveraging with progressive dividends and sustainable share
buy-backs; and

•  Investing in selective bolt-on M&A to accelerate our transformation.
 

 

This year, we have announced a 2% dividend increase and a £1.3 billion share
buy-back.

 

We remain on track with deleveraging and expect to be within our 2-2.5x target
leverage range** by year-end.

 

BOARD CHANGES

We have seen a number of Board changes over the past year.

 

In August, Soraya Benchikh stepped down as Chief Financial Officer and from
the Board. I thank Soraya for her contribution to BAT.

 

In November, we welcomed Matthew Wright to the Board as an Independent
Non-Executive Director, and a member of the Remuneration and Nominations
Committees.

 

As a former CEO of a global leadership consultancy, Matthew brings extensive
international business experience, underpinned by deep people and culture
expertise gained across various industries.

 

Having served on the Board for nine years, Holly Keller Koeppel will step down
from the Board at the conclusion of this AGM.

 

I would like to thank Holly for her outstanding contribution over her tenure,
including as Senior Independent Director, and chair of the Audit Committee
before that.

 

As announced last week, Dragos Constantinescu will join BAT as Chief Financial
Officer and Executive Director with effect from 1 September 2026.

 

Dragos is currently serving as CEO of Asahi Europe & International, where
he has held a number of senior leadership roles since 2019. Prior to this, he
spent 16 years at BAT.

 

His strong combination of financial expertise, senior leadership and
international experience in both the Nicotine and FMCG sectors will be key
assets as our transformation continues.

 

Javed Iqbal will continue acting as Interim Chief Financial Officer until
Dragos' appointment, following which Javed will continue in his role as
Director, Digital and Information. I would like to thank Javed for his
dedication and excellent contribution during this period.

 

SUMMARY AND THANKS

In closing, after a long and ever-changing career in this industry, I truly
believe that BAT has the full set of strengths needed to realise its ambitions
and Build a Smokeless World.

 

The trust of our shareholders and the commitment of our people have shaped
this business for nearly 125 years.

 

Much has changed - but our resilience and consumer focus has not. Our journey
to a Smokeless World is real and it's happening now.

 

I firmly believe were it not for the stigma that surrounds the industry, our
transformation to date would be considered extraordinary. And, in time, I
believe the world will come to see it that way.

 

With the capabilities that underpin our transformation, and our track record
of generating strong cash returns, I'm confident in the trajectory of this
business, the exciting opportunities ahead and the difference we have the
potential to make.

 

Before we move to the resolutions, let me thank my fellow directors on the
Board, our Chief Executive, Tadeu, the Management Board, and all our
employees, for their hard work and delivery in 2025, and driving further
confidence in delivery for the year ahead.

 

 

 

 

Notes:

 

‡ The seven markets we are piloting age-estimation technologies in are:
Croatia, Bosnia and Herzegovina, Poland, Italy, Serbia, Greece and the Channel
Islands.

 

1. Smokeless products/alternatives refers to smokeless tobacco and nicotine
products, including Vapour products, Heated Products and Modern Oral products,
which are collectively termed New Categories, as well as Traditional Oral
products.

 

2. The number of adult consumers of Smokeless products is defined as the
estimated number of legal age (minimum 18 years) consumers of the Group's
Smokeless products, which does not necessarily mean these users are solus
consumers of these products. In markets where regular consumer tracking is in
place, this estimate is obtained from adult consumer tracking studies
conducted by third parties (including Kantar). In markets where regular
consumer tracking is not in place, the number of consumers of Smokeless
products is derived from volume sales of consumables and devices in such
markets, using consumption patterns obtained from other similar markets with
adult consumer tracking (utilising studies conducted by third parties
including Kantar). The number of adult consumers is adjusted for those
identified (as part of the consumer tracking studies undertaken) as using more
than one BAT Brand.

 

The number of adult consumers of Smokeless products is used by management to
assess the number of adult consumers regularly using the Group's New Category
products as the increase in Smokeless products is a key pillar of the Group's
Sustainability ambition and is integral to the sustainability of our business.

 

The Group's management believes that this measure is useful to users of the
financial statements given the Group's Sustainability ambition and alignment
to the sustainability of the business with respect to the Smokeless portfolio.

 

3. Human, D., et al./ The Safer Nicotine Revolution: Global Lessons, Healthier
Futures. Smoke Free Sweden 2025. Available at:
www.smokefreesweden.org/safer-nicotine-revolution.pdf

4. Office for National Statistics (ONS), released 4 November 2025, ONS
website, statistical bulletin, Adult smoking habits in the UK: 2024

5. Agaku, I. (2026). Tobacco Product Use among U.S. Adults, 2023-2024. NEJM
Evidence. doi: www.doi.org/10.1056/evidpha2500339

 

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

 

† Products 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.

 

** On an adjusted for Canada basis.

 

 

Forward-Looking Statements

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

 

This address does not constitute an invitation to underwrite, subscribe for,
or otherwise acquire or dispose of any BAT shares or other securities. This
address 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," "expect," "estimate," "project," "positioned,"
"strategy," "outlook", "target," "being confident" and similar expressions.
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 British American Tobacco Group (the "Group") operates.

 

In particular, these forward-looking statements include, among other
statements, certain statements under the headings "REFLECTIONS ON 2025",
including the Group's expectation to be future-fit in a digitally-driven
consumer landscape and the Group's ambition to be a predominantly Smokeless
business by 2035, "OUTLOOK", including the Group's confidence in delivering
its mid-term algorithm, the Group's expectation to deliver over £50 billion
of free cash flow between 2024 and 2030, the Group's commitment to strong
shareholder returns and the Group's belief in remaining on track to be within
its 2-2.5x target leverage range by year-end, on an adjusted for Canada basis,
and "SUMMARY AND THANKS".

 

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 address 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 increased competition from illicit
trade and illegal products; changes or differences in domestic or
international economic or political conditions; the impact of adverse domestic
or international legislation and regulation of tobacco, New Categories and
other regulation; the impact of supply chain disruptions; adverse litigation
and 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; the inability to develop, commercialise and deliver the Group's
New Categories strategy; adverse decisions by domestic or international
regulatory bodies, including disputed taxes, interest and penalties; the
impact of serious injury, illness or death in the workplace and those who work
with the business; the ability to maintain credit ratings and to fund the
business under the current capital structure; translational and transactional
foreign exchange rate exposure; direct and indirect adverse impacts associated
with climate change (both physical and transition); the ability to deliver a
viable circular business model in response to global demand, combined with
increasing regulatory, stakeholder and consumer pressure; and the Group's
ability to defend against Cyber & Digital actions that result in loss of
confidentiality, availability or integrity of systems and data.

 

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 address and the Group 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.

 

Additional information concerning these and other factors can be found in
BAT's filings with the U.S. Securities and Exchange Commission ("SEC"),
including the Annual Report on Form 20-F, filed on 13 February 2026, 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.

 

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

 

 

 

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