Company Reports

British American Tobacco presented an updated strategy at its capital markets day, but most of it was unchanged. BAT expects to drive growth from new categories while extracting robust free cash flow generation from its combustibles business.

British American Tobacco is the world’s third-largest tobacco company by volume, with sales in around 180 countries. But with global cigarette consumption declining a mid-single-digit percentage each year, BAT has invested in several next-generation products that can deliver nicotine with reduced risk. This strategy makes sense, and we think it has a decent portfolio that should allow it to drive low-single-digit top-line growth in the long term.

British American Tobacco announced that first-half revenue grew 3% in constant currency and that adjusted operating margin expanded 30 basis points to 43.7%. Reduced-risk revenue grew 17% (now 16% of total), primarily driven by its Velo nicotine pouch.

British American Tobacco announced that it remains on track to reach the lower end of medium-term guidance (3%-5% revenue growth and 4%-6% adjusted profit from operations) for 2026. In reduced risk (18% of 2025 revenue), pouch and vape revenue grew, but heated tobacco sales declined.

On April 9, British American Tobacco announced that Dragos Constantinescu would join the firm as CFO effective Sept. 1. His predecessor, Soraya Benchikh, left the company in August 2025.

British American Tobacco is the world’s third-largest tobacco company by volume, with sales in around 180 countries. But with global cigarette consumption declining a mid-single-digit percentage each year, BAT has invested in several next-generation products that can deliver nicotine with reduced risk. This strategy makes sense, and we think it has a decent portfolio that should allow it to drive low-single-digit top-line growth in the long term.

British American Tobacco successfully restored revenue and profit growth for its US business for the first time since 2022. In constant currency and excluding Canada, companywide revenue rose 2.1%, and adjusted operating margin was flat at 44%.

British American Tobacco announced in its pre-close trading update that it was on track for constant-currency growth of about 2% for both revenue and adjusted profit from operations in 2025 (in line with previous guidance). In the US, it took share in combustibles, nicotine pouches, and vapes.

British American Tobacco is the world’s third-largest tobacco company by volume, with sales in around 180 countries. But with global cigarette consumption declining a mid-single-digit percentage each year, BAT has invested in several next-generation products that can deliver nicotine with reduced risk. This strategy makes sense, and we think it has a good enough to portfolio that should allow it to drive low-single-digit top-line growth in the long term.

British American Tobacco is the world’s third-largest tobacco company by volume, with sales in around 180 countries. But with global cigarette consumption declining a mid-single-digit percentage each year, BAT has invested in several next-generation products that can deliver nicotine with reduced risk. This strategy makes sense, and we think it has a good enough to portfolio that should allow it to drive low-single-digit top-line growth.

British American Tobacco's first-half results benefited from an improvement in its US business. At constant currency and excluding Canada, companywide revenue was up nearly 2% to GBP 12.1 billion, and adjusted operating margin was flat at 44.7%.

British American Tobacco's shares were up 2% after reporting its first-half pre-close trading update. Improved performance in the modern oral category and US combustibles led the company to raise 2025 revenue growth guidance to 1%-2% from just 1% prior.

British American Tobacco is the world’s second-largest tobacco company by volume, with sales in around 180 countries. But with global cigarette consumption declining a mid-single-digit percentage each year, BAT has invested in several next-generation products that can deliver nicotine with reduced risk. This strategy makes sense, but we think the firm has placed too many bets, leading to it becoming a “jack of all trades, master of none.”

British American Tobacco ended 2024 with adjusted organic revenue growth and adjusted organic operating profit growth up a little over 1%, in line with guidance. For 2025, management has guided to 1% and 2%, respectively, well below the medium-term algorithm of 3%-5% and 4%-6%, respectively.

British American Tobacco’s preclose second-half trading update provided no specific results but reaffirmed most of its previously issued guidance. The company continues to expect low-single-digit revenue and adjusted profit growth on an organic and constant-currency basis for the full year.

British American Tobacco presented its updated strategy for growing next-generation product revenue and extracting value from its combustibles business. The company reaffirmed its outlook for 3%-5% revenue growth and 4%-6% EBIT growth through 2026.

British American Tobacco is the world’s second-largest tobacco company by volume, with cigarette sales to over 180 countries. But with global cigarette consumption declining about 5% per year, BAT has invested in several next-generation products that can deliver nicotine with reduced risk. This strategy makes sense, but we think the firm has placed too many bets, leading to it becoming a “jack of all trades, master of none.”

Wide-moat British American Tobacco reported an organic revenue decline of 0.8% and a flat adjusted organic operating margin of 44.9%. The company continues to believe that results will improve in the second half, driven by new products and investments in its US commercial distribution. Management reaffirmed full-year guidance for low-single-digit organic constant-currency revenue growth and low-single-digit organic adjusted-profit growth, inclusive of expected currency headwinds of about 2%.

We’ve reaffirmed our wide moat rating and fair value estimates of GBX 3,900 per share and $49 per ADR for British American Tobacco. This is based on our view that its growth will benefit from its next-generation products, but to a lesser extent than wide-moat peer Philip Morris International. In cigarettes, we continue to expect price increases will outpace declining volumes. Our valuation implies a 2024 price/adjusted earnings ratio of 11.5 times, enterprise value/adjusted EBITDA of 8 times, and 6% dividend yield. These multiples are at the middle of the tobacco peer group given middling long-term growth.

British American Tobacco is the world’s second largest tobacco company by volume, with cigarette sales to over 180 countries. But with global cigarette consumption declining about 5% per year, BAT has invested in several next-generation products that can deliver nicotine with reduced risk. This strategy makes sense, but we think the firm has placed too many bets, leading to it becoming a “jack of all trades, master of none.”