Smokeless Consumer Growth
Added 4.7 million smokeless consumers in 2025, bringing the total to 34.1 million, driven mainly by Modern Oral — the strongest growth acceleration to date and positioning the business for 2026.
British American Tobacco
· BTI
February 12th, 2026
Summary
- Earnings Call Date:
- 2026-02-12
- Change Since:
- +2.74%
- Next Earnings Date:
- 2026-07-30
Earnings Call Sentiment
PositiveThe call conveyed clear positive transformation momentum: top-end-of-guidance delivery, strong Modern Oral outperformance (Modern Oral +48%, Velo Plus >300%), U.S. recovery (U.S. revenue +5.5%, adjusted profit +5.9%), meaningful productivity savings and strengthened shareholder returns (dividend +2%, buyback to GBP 1.3bn). However, material challenges remain—Vapour declines and illicit market pressure, significant APMEA weakness (revenue -7.2%, profit -17.9%), transactional FX headwinds and near-term Fit2Win costs—leading management to guide conservatively for 2026. On balance the positive operational progress, cash generation and category leadership outweigh the regional and category headwinds.
Company Guidance
Management guided to a return to its midterm algorithm — 3–5% revenue growth, 4–6% adjusted profit from operations growth and 5–8% adjusted diluted EPS growth — and said 2026 should sit at the lower end of those ranges with profit performance second‑half weighted (driven by New Category investment phasing and Fit2Win savings ramping). They expect low double‑digit New Category revenue growth (led by Velo), a further improvement in New Category contribution, and continued savings: a target of GBP 2.0bn productivity savings by 2030 (having already delivered GBP 1.2bn since 2023) plus Fit2Win to deliver GBP 600m annualized incremental savings by 2028 (around GBP 500m by 2027), with ~GBP 600m of associated costs over the next two years (c. GBP 500m treated as adjusting, including ~GBP 100m non‑cash). Financial priorities include >GBP 50bn free cash flow to 2030, a progressive dividend (a 2% increase announced) and a sustainable buyback of GBP 1.3bn for 2026, while continuing to deleverage from 2.55x adjusted net debt/EBITDA (end‑2025) toward a 2.0–2.5x target.
Group Results at Top End of Guidance
Delivered 2025 group results at the top end of guidance (constant currency): group revenue +2.1%, adjusted profit +3.4%, adjusted profit from operations +2.3%, and adjusted diluted EPS +3.4%.
Modern Oral Outperformance
New Categories revenue +7%; Modern Oral revenue +48% (global leadership in top markets), Velo Plus >300% growth in the U.S. since launch, Velo Plus reached positive category contribution within its first year and Velo global volume share leadership in Modern Oral.
U.S. Combustibles and Overall U.S. Strength
U.S. revenue +5.5% and adjusted profit +5.9%. U.S. Combustibles revenue +4.6% with value share +30 basis points (volume share down 10 bps). New Category revenue in U.S. nearly +20%; Vuse returned to H2 revenue growth.
New Category Profitability and Contribution
New Categories gross profit rose by over GBP 200 million with category contribution reaching GBP 442 million; since 2021 Category contribution improved by ~GBP 1.4 billion.
Operational Efficiency and Productivity Savings
Delivered GBP 1.2 billion in productivity savings since 2023; targeting a further GBP 2 billion by 2030. Fit2Win expected to deliver GBP 600 million of annualized incremental savings by 2028 (GBP 500m by 2027).
Strong Cash Generation and Shareholder Returns
Announced a 2% dividend increase and raised share buyback to GBP 1.3 billion for 2026 (+GBP 200m). Deleveraged to 2.55x adjusted net debt/EBITDA at end-2025 and on track to 2.0–2.5x by year-end; targeting >GBP 50 billion free cash flow by 2030.
Regional AME Outperformance
AME revenue growth >3% with Combustibles up >2% and New Category revenue +4.3% (Modern Oral +17%); AME adjusted operating profit grew nearly 10% driven by operating leverage and efficiency gains.
Tadeu Marroco
Good morning, everyone. I'm delighted to welcome you to our Full Year 2025 Results Presentation. With me this morning, Javed Iqbal, Interim CFO; and Victoria Buxton, Group Head of Investor Relations. I will begin with our transformation highlights. Javed will then take you through our financial results in more detail. Finally, I will return to talk more about our performance outlook and why we are confident in the pathway ahead given the clear momentum we are driving. We will then take your questions. With that, I would like to draw your attention to the disclaimers on Slides 2 and 3.
So let's begin by looking at the positive transformation momentum we are driving. Starting with some key highlights. We added 4.7 million smokeless consumers, bringing our total to 34.1 million, mainly driven by our continued strong performance in Modern Oral. This marks our strongest growth acceleration to date and position us well for 2026. We delivered 2025 group results at the top end of guidance, driven by resilient delivery in combustibles and an excellent performance from Velo in all three regions. Our disciplined focus on quality growth continues to improve returns on more targeted investments with new category contributing now up 77% at constant rates. Alongside this, we remain committed to investing behind our premium innovation launches, supporting long-term value creation. We continue to deliver strong cash returns for shareholders.
In addition to our progressive dividend, in December, we announced an increase to our share buyback to GBP 1.3 billion in 2026. Looking ahead, we are ...
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