British American Tobacco forecasts modest revenue growth for 2025
Image: AFP
British American Tobacco (BAT) is likely to generate 1% to 2% revenue growth in its 2025 financial year, as first-half revenue to June 30 was likely to be slightly ahead of previous guidance, CEO Tadeu Marroco said on Tuesday.
He said in a trading statement that the full-year revenue growth would support 1.5% to 2.5% growth in adjusted profit from operations.
The cigarette and non-combustible tobacco product group said their US operations were expected to return to revenue and profit growth in the first half, driven by strengthening combustibles delivery and 'an excellent Velo Plus performance.'
There has also been strong global growth from Velo in Modern Oral, the fastest-growing New Category segment.
The performance in Asia and the Middle East remained strong, led by Brazil, Turkiye, and Romania, but performance in the Asia-Pacific, Middle East, and Africa was impacted by excise and regulatory challenges in Bangladesh and Australia, as previously guided.
In the first half, New Categories revenue growth was expected to be in the low single digits, with the impact of illicit vapour products in the US and Canada partly offsetting 'excellent Velo performance.'
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New Category product growth was being driven by the deployment of innovations in key markets, and there was a further improvement in the New Category contribution margin, driven by the group's 'Quality Growth' focus.
Cash generation was strong with balanced capital allocation. Leverage was being reduced, and the group remained committed to progressive dividends and sustainable share buy-backs.
'2025 is a deployment year and, as previously highlighted, we expect our performance to be weighted in the second half, mainly driven by the roll-out of New Category innovations in key markets from the middle of the year,' said Marroco.
He said that while the combustibles industry volume remained under pressure, total industry volume and value share had stabilised.
'Excluding the deep discount segment where we are not present, we are gaining share, driven by Natural American Spirit and Lucky Strike,' he said.
He said the vapour category remained impacted by the proliferation of illicit vapour products in the US and Canada, with US legal industry volume down mid-teens year-to-date.
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