BAT: Interim Business Update

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– Reaffirms FY23 EPS guidance: organic revenue growth in the low end of 3-5%; mid-single digit EPS growth

– Continued strong volume and revenue growth and increased profitability in New Categories, led by Vuse and Velo

– New Category contribution expected to broadly break-even, two years ahead of the original target (2025)

– Strong AME and APMEA growth, driven by the strength of well-balanced portfolio of global brands

– Macro-economic pressures in the US impacting combustibles performance despite the commercial plans starting to deliver early signs of portfolio recovery

– Commitment to “Building a Smokeless World”: ambition to become a predominantly smokeless business, with 50% of revenue from non-combustibles by 2035 (i.e. 10 years behind PMI)

– Non-cash adjusting impairment charge of around £25Bn, relating to some of acquired US combustibles brands. Amortization of the remaining value of US combustibles brands to commence from January 2024

– 2024 investments to strengthen the US business, accelerate innovation in heated products and enhance capabilities that support strategic delivery

– 2024 Guidance: revenue and adjusted profit from operations of low-single digit on an organic basis at constant rates. Progressive improvement to 3-5% revenue growth, and mid-single digit adjusted profit from operations growth on an organic basis at constant rates by 2026

– Progress towards reaching the middle of 2-3x adjusted Net Debt / adjusted EBITDA leverage range: to be around 2.7x by year end. In-line with our forecast (Recall: Share Buybacks)

– Continue to evaluate all opportunities to enhance balance sheet flexibility, including disposals and the exit of non-strategic markets


Flat global volume share (YTD). Value share down 40bps, reflecting the impact of commercial actions in the US and despite the strong performance in AME and APMEA

Macro-economic pressures and the continued proliferation of illicit disposable vapes impacting combustibles industry volume in H2 2023 in the US with with recent signs of premium segment pressure

US volume share down 10bps (YTD vs FY22). Commercial plans continue to show early signs of
share recovery with a 50bps improvement between January and October driven by Newport, Natural
American Spirit and Lucky Strike

New Categories

E-vapor: Extended global leadership position. Value share up 100bps to 36.8% in key markets. Value share up 500bps to 46% in the US. Vuse Go now available in 59 markets

Nicotine pouches: Clear category leadership in Europe with 67% volume share in key markets. Global volume share down due to US. Securing the PMTA for Europe-leading Velo 2.0 platform to support longer-term competitiveness in the US

Heated tobacco: Disappointing performance. Deceleration in organic volume and revenue growth in H2 2023 with YTD volume share down 100bps in key markets to 18.2%. glo Hyper Air performing in line with expectations. Recently launched veo in 10 markets in Europe

Technical guidance: FY23

– Global tobacco industry volume: down ~3%

– Transactional FX: ~2% headwind on FY23 EPS

– Translational FX: ~3% headwind on FY23 EPS

– Operating cash flow conversion: close to 100%

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