Ahead of the FY25 Trading Update release
Release date: December 9, 2025 (before the LSE opening bell)
Consensus estimates: 2.1% revenue and 2.1% adj. operating profit growth in 2025; acceleration in financial delivery to 3.5% revenue and 4.7% adj. operating profit growth in 2026
British American Tobacco (BAT) repeatedly committed to return to 3%-5% revenue and mid-single digit (4%-6%) adjusted operating profit growth (“mid-term growth”) algorithm on a sustainable basis by 2026. Consensus estimates assume that BAT will deliver on its mid-term financial commitment. Although BAT will disclose the FY25 Results only on February 12, 2026, Trading Update serves as an opportunity for BAT to build further confidence on the acceleration of its financial delivery (based on market share, volume, revenue and profit trends).
FY25 Trading Update
– On track for FY25 delivery. Re-affirms FY26 guidance and announces a £1.3 billion share buy-back
– FY25: c.2% revenue and adjusted profit from operations growth; New Category revenue growth accelerating to double-digit in H2 2025, driving mid-single digit for FY25
– FY26: lower end of the sustainable, mid-term growth algorithm (+3-5% revenue, +4-6% adj. operating profit, +5-8% adj. diluted EPS)
– Operating cash flow conversion in excess of 95% in FY25; on track to reduce leverage to within 2.0-2.5x by end 2026, alongside progressive dividends and sustainable share buy-backs
– Strong U.S. revenue and profit momentum, driven by ongoing combustibles delivery. Stellar Velo Plus performance: reached # 2 in volume and value share, with profitability on-track for full year. Early signs of Federal & State enforcement actions tackling U.S. illicit vape products support recent Vuse volume and revenue improvement. AME delivery remains strong; APMEA impacted by ongoing fiscal and regulatory headwinds in Bangladesh and Australia
Category Performance
– Further acceleration in New Category contribution: VELO driving strong global growth in Modern Oral, the fastest growing New Category. Focused on establishing glo HILO as a premium offering in three priority markets (Japan, Italy, Poland) with further roll-outs planned in 2026. Premium VUSE Ultra vape platform drives encouraging early results in three priority launch markets (Canada, France, Germany)
– Combustibles: Resilient financial performance driven by the U.S. and AME. Group value share in top markets flat, volume share -10bps. U.S. value share +20bps, volume share flat. Improving H2 2025 Group revenue and category profit performance driven by the U.S. Resilient AME financial performance led by Brazil, Turkey and Mexico. APMEA performance impacted by material fiscal and regulatory headwinds in Bangladesh and Australia (c.-1% on revenue and c.-2% on operating profit growth, as expected)
– Nicotine pouches (VELO): Category leadership in AME. Volume share +460bps to 15.9% of Total Oral and +590bps to 31.8% of Modern Oral in top markets. Strong double-digit revenue growth, driven by industry growth and volume share gains. Stellar VELO Plus perfromance in the US, driving volume share of Modern Oral +920bps to 15.6% and triple-digit revenue growth (positive FY25 category contribution). Continued leadership in AME, with strong financial delivery
– Heated tobacco (glo): Broadly flat FY25 revenue growth, impacted by competitive activity and resource reallocation ahead of glo HILO launches. Volume share in top markets -1.2ppts, impacted by Japan, which remains highly competitive alongside the continued phase-out of 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. Established glo HILO in the premium segment with H2 launches – Japan (Sept), Poland (Oct) and Italy (Nov)
– Vapes (Vuse): Improved H2 revenue performance driven by recent U.S. improvement. Continued global leadership in tracked channels, with value share in top markets +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
Technical FY25 Guidance
– 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 at constant rates, incl. a c.1% transactional FX headwind
– c.3% translational FX headwind on adjusted profit from operations and c.4% on adjusted diluted EPS
– Net finance costs1 of c.£1.8 billion, subject to FX and interest rate volatility
– Operating cash flow conversion in excess of 95%, gross CAPEX of c.£650 million
– Continue to deleverage to 2.0-2.5x adjusted net debt/adjusted EBITDA target range by end 2026
Download BAT FY25 Pre-close Trading Update press release
