Ahead of H1 2026 Earnings Release
Release date: July 30, 2026 (before the opening bell)
Revenue: £12.19 billion (+1.0% reported, +3.0% at constant currency)
Adj. Profit from Operations (APFO): £5.24 billion (+1.4% reported, +3.7% at constant currency)
EPS: £1.585 (+1.9% reported, +4.6% at constant currency)
Latest guidance: Lower end of the mid-term algorithm (3-5% revenue, 4-6% APFO and 5-8% adjusted diluted EPS growth). Mid-teens New Category revenue growth in both H1 2026 and FY26. APFO growth H2 weighted.
H1 2026 Results
– Revenue: £12.24Bn (vs. £12.19Bn exp.; up +1.4% reported, +2.9% at constant FX), driven by a strong multi-category delivery in the U.S. and resilience in AME, partly offset by a slower-than-expected recovery in APMEA
– Revenue from New Categories: £1.93Bn (up +16.8% reported, +18.0% at constant FX); Revenue from New Categories: 15.8% of total; New Category contribution: up +54.7% at constant FX to £257 million (contribution margin up +3.3 ppts to 13.3%)
– Revenue from Smokeless products (including traditional): 19.8% of total (+1.6 ppts vs. FY25); 35.0 million smokeless consumers (+0.9 million)
– Adj. Operating Profit (APFO): £5.32Bn (£5,426 million at constant FX; £5,319 million as adjusted for Canada at constant FX, up +3.5%, vs. £5.31Bn exp.).
– Adj. Operating Margin: 43.5% (-20 bps to 44.4% at constant FX; 43.5% as adjusted for Canada; up +30 bps)
– Adj. EPS: 145.3p reported; 167.7p adjusted at constant FX; 164p adjusted for Canada at current FX; 167.8p adjusted for Canada at constant FX (up +7.9%; vs. 158.5p exp.)
– Guidance Positioning: On track for full-year delivery; revenue and operating profit growth remain at the lower end of the mid-term target (3–5% revenue, 4–6% operating profit growth), with adjusted diluted EPS growth upgraded to towards the middle of the 5–8% range
Key Financial Highlights
– Expectations Met/Exceeded: H1 performance is firmly in line with to slightly ahead of expectations on revenue, profit, and EPS. Confident in delivering FY26 guidance led by accelerating New Category delivery and strong U.S. performance.
– Regional Split: U.S. top-line momentum accelerated (+8.5% at constant FX), supported by strong performance across Modern Oral, Vapour, and combustibles pricing. AME delivered resilient performance (+0.9% at constant FX) led by Brazil and Türkiye. APMEA performance (-6.3% at constant FX) was negatively impacted by ongoing regulatory and illicit trade challenges in Bangladesh and Australia, alongside inventory timing in Vietnam and competitive pressures in Japan.
– Category Acceleration: Modern Oral became BAT’s largest New Category by revenue, surging +65.9% globally at constant FX. U.S. Vapour returned to double-digit revenue growth (+19.8% at constant FX).
– Regulatory/Enforcement Support: FDA prioritization guidance for Vapour and Modern Oral, alongside heightened state and federal enforcement against illicit vapes, positions Reynolds to gain compliant market share in the U.S.
– Cost Savings & Restructuring: Fit2Win operational/process review program on track, incurring £370 million in adjusting costs during H1 2026 as part of broader multi-year efficiency initiatives.
– Litigation Updates: Legal settlement with ITG Brands resulted in a £149 million adjusting credit to operating profit. UK Supreme Court decisions on FII GLO litigation resulted in net adjusting finance cost and tax credits. Additionally, U.S. DOJ legal proceedings regarding past sanctions compliance were formally dismissed with prejudice.
– Capital Returns & Balance Sheet: On track for £1.3 billion share buy-back program in 2026 (£649 million executed in H1 2026). Operating cash flow conversion reached 80% in H1 (on track for >95% FY26). De-leveraging continues toward the 2.0–2.5x adjusted net debt/adjusted EBITDA corridor by year-end.
FY26 Guidance
– Revenue Growth: Lower end of the 3.0%–5.0% mid-term guidance range (at constant FX), with mid-teens New Category revenue growth (accelerated from prior low-double-digit expectations).
– Adj. Operating Profit Growth: Lower end of the 4.0%-6.0% range (at constant FX), strongly H2 weighted.
– Adj. Diluted EPS Growth: Upgraded to towards the middle of the 5.0%–8.0% guidance range (at constant FX, as adjusted for Canada).
– Global Tobacco Industry Volume: Expected to be down c.3% (revised from c.2.5%).
– FX Headwinds: Expected c.1% transactional FX headwind; translational FX headwind of c.2%–3% on adjusted diluted EPS.
– Net Finance Costs: Adjusted net finance costs expected to be c.£1.65 billion (as adjusted for Canada, reduced from £1.75Bn).
– Gross CAPEX: Approximately £750 million.
– Operating Cash Flow Conversion: Greater than 95%.
– Leverage & Returns: Target corridor of 2.0–2.5x adjusted net debt/adjusted EBITDA by end of FY26; commitment to dividend growth in sterling terms and £1.3 billion total share buy-backs in 2026.
Key Highlights – Product Categories
Combustibles
– Overall: Revenue grew +0.5% reported to £9,561 million (+2.1% at constant FX), as robust price/mix (+6.8%) more than offset a 4.6% decline in Group volume to 218 billion sticks. Category contribution rose +2.7%. Global volume share down -30 bps and value share down -40 bps in top markets.
– USA: Revenue increased +5.0% at constant FX (+1.3% reported) to £4,542 million constant, as strong price/mix (+10.2%, including excise duty drawback) and inventory timing offset a 5.2% volume decline (vs. industry volume decline of 4.0%). Volume share (-80 bps) and value share (-40 bps) declined due to under-representation in deep discount, though volume share showed clear signs of stabilizing in H1 2026.
– AME: Revenue grew +2.5% at constant FX (+4.0% reported) to £3,297 million constant, driven by volume and pricing expansion in Türkiye, as well as pricing in Brazil and Mexico. This offset lower volume in Germany (trade label growth), Romania, Ukraine, and the market exit from Cuba. Volume share was flat; value share down -20 bps.
– APMEA: Revenue fell -4.8% at constant FX (-7.0% reported) to £1,877 million constant, with volume down -2.8%. Severe illicit trade headwinds persisted in Australia (where illicit volume is estimated at c.80% of total industry volume) and Bangladesh, alongside inventory timing in Vietnam and lower volume in Malaysia. Strong pricing and volume recovery in Pakistan partially mitigated these declines.
Vapor
– Overall: Category revenue returned to growth, rising +3.6% reported to £763 million (+5.3% at constant FX), with global volume up +4.2%. Extended global tracked channel value share leadership by +1.2 ppts.
– USA: Revenue surged +19.8% at constant FX (+15.6% reported) to £519 million constant, driven by a 14.9% volume increase and +4.9% price/mix. Performance benefited from competitor dynamics and accelerating state/federal enforcement against illicit single-use vapes. Vuse extended its category value share leadership in tracked channels by +4.1 ppts to 55.9%. Planned rollout of adult-focused Vuse flavours in H2 2026.
– AME: Revenue declined -13.9% at constant FX (-11.9% reported) to £230 million constant, primarily due to regulatory shifts in Poland and heightened competition in rechargeable closed systems in Europe/Canada. Value share leadership down -1.7 ppts. Targeted rollout of premium Vuse Ultra continuing in H2 2026.
– APMEA: Revenue fell -28.2% at constant FX (-25.6% reported) to £26 million constant, with volume down -20.2%, reflecting strategic exits from low-margin markets (Indonesia and South Korea) to focus on Quality Growth.
Heated Tobacco
– Overall: Revenue declined -14.2% reported to £563 million (-11.7% at constant FX to £574 million constant). Volume share in top markets fell -1.2 ppts due to aggressive competitive discounting in key geographies.
– APMEA: Revenue fell -12.5% at constant FX (-19.4% reported) to £198 million constant, with volume down -18.0% to 5.1 billion sticks, heavily impacted by adverse inventory movements and competitive intensity in Japan.
– AME: Revenue dropped -10.8% at constant FX (-8.8% reported) to £194 million constant (volume down -2.8% to 3.8 billion sticks). Growth in Romania was offset by lower revenue in Poland and heavy commercial activation/launch investments for glo Hilo and glo Hyper Pro+ in Italy.
– Product Strategy: glo Hilo is generating positive share growth in premium segments across Japan, Poland, Italy, Romania, and Greece. BAT plans further amplification in H2 2026, alongside a phased rollout of the Hyper Pro+ upgrade in the value segment.
Modern Oral
– Overall: Revenue jumped +66.6% reported to £784 million (+65.9% at constant FX to £780 million constant), while volume expanded +57.5% to 7.8 billion pouches. Modern Oral is now BAT’s largest New Category by revenue. Global volume share leadership expanded +8.4 ppts to 39.2% across top markets.
– USA: Revenue soared +220% at constant FX (+209% reported) to £327 million constant, driven by a 188% volume surge (3.2 billion pouches) as Velo Plus and Grizzly Modern Oral gained mass adoption. Category volume share expanded +11.6 ppts to 29.8%. National rollout of Velo Max planned for H2 2026.
– AME: Revenue grew +21.8% at constant FX (+26.5% reported) to £423 million constant, with volume up +18.9% to 3.9 billion pouches. Category leadership was sustained across core Scandinavian markets (Sweden, Denmark) as well as expanding markets (UK, Poland).
– APMEA: Revenue increased +43.2% at constant FX (+37.4% reported) to £30 million constant, with volume up +27.5% to 0.7 billion pouches. Strong momentum across Japan, Pakistan, South Africa, Kenya, UAE, and Global Travel Retail.
Traditional Oral
– Overall: Volume down -9.6% to 2.5 billion stick equivalents. Revenue fell -8.8% reported to £494 million (-5.8% at constant FX).
– USA: Accounts for 97% of category revenue. Revenue fell -5.2% at constant FX (-8.5% reported) to £494 million constant, as price/mix (+7.2%) was insufficient to offset a 12.4% volume drop caused by consumer migration into Modern Oral pouches. Grizzly lost 40 bps of value share and 60 bps of volume share.
– Outside USA: Revenue fell -22.5% at constant FX (-18.0% reported), led by declines in Granit in Sweden.
Beyond Nicotine
– Corporate Venturing: Btomorrow Ventures has now completed over 30 investments via its £350 million CVC commitment, focusing on smokeless nicotine technologies, sustainability, and wellbeing/stimulation.
– Product Exploration: Functional shot brand Ryde continues retail and e-commerce expansion in the U.S. (focused on Texas and online channels), alongside established presence in Australia and Canada.
Key Highlights – USA (62% of Adjusted Operating Profit)
– Financial Summary: Total reported revenue up +4.7% (+8.5% at constant FX) to £5,687 million (£5,893 million constant). Adjusted operating profit grew +10.1% at constant FX (+6.0% reported) to £3,371 million constant. Adjusted operating margin expanded +80 bps to 57.2% at constant FX (+4.1 ppts reported to 45.6%).
– Combustibles: Revenue up +5.0% at constant FX (+1.3% reported), driven by strong price/mix (+10.2%, including duty drawback) and inventory timing, offsetting a 5.2% volume decline. Cigarette volume share (-80 bps) and value share (-40 bps) experienced pressure from deep discount expansion, but volume share stabilized during H1 2026.
– Vapor: Revenue up +19.8% at constant FX (+15.6% reported) to £519 million constant, with volume up +14.9%. Vuse extended its dominant value share leadership in tracked channels to 55.9% (+4.1 ppts). Enhanced enforcement against illicit single-use vapes and FDA guidance provide strong tailwinds heading into H2.
– Modern Oral: Revenue rose +220% at constant FX (+209% reported) to £327 million constant. Volume expanded +188% to 3.2 billion pouches, driving Modern Oral category volume share up +11.6 ppts to 29.8%. Velo Max national rollout scheduled for H2 2026.
– Traditional Oral: Revenue down -5.2% at constant FX (-8.5% reported) to £494 million constant; price/mix (+7.2%) offset by -12.4% lower volume due to category switching into Velo.
Executive Summary
BAT’s H1 2026 results demonstrate strong operational execution and financial resilience, outperforming baseline market expectations across revenue (£12.24Bn actual vs. £12.19Bn exp.), adjusted operating profit (£5.32Bn vs. £5.31Bn exp.), and adjusted diluted EPS (164p actual vs. 158.5p exp.).
The primary growth engine for the Group continues to be the United States, which delivered outstanding multi-category expansion (+8.5% CC top line, +10.1% CC operating profit). The spectacular acceleration of Velo Plus (+220% CC revenue growth in the U.S.) has officially established Modern Oral as BAT’s largest New Category globally. Furthermore, U.S. Vapour returned to impressive top-line growth (+19.8% CC) as regulatory and law enforcement clampdowns on illicit, non-compliant single-use disposable vapes created an operational tailwind for Vuse.
Conversely, regional drag remains concentrated in APMEA (-6.3% CC revenue), where systemic illicit trade in Australia (now ~80% of total volume) and Bangladesh, coupled with competitive pricing friction in Japanese Heated Tobacco, continue to weigh on profitability. Heated Products globally (-11.7% CC revenue) remains BAT’s softest category, though management is deploying glo Hilo to regain momentum in premium price points.
Financially, BAT’s cash engine is operating effectively: free cash flow surged +85.2% to £2.29 billion, supporting £1.3 billion in 2026 share buy-backs and progress toward the target 2.0–2.5x leverage corridor. The upward revision of FY26 adjusted EPS guidance to towards the middle of the 5.0%–8.0% range provides further confirmation that BAT is balancing traditional combustible cash generation with scalable, profitable smoke-free growth.
Downloads:
BAT – HY26 Results – Press Release
