British American Tobacco (BAT) has reported an increase in its first-half earnings, which were driven by a recovery in its US operations and growth in its smokeless business, despite facing foreign exchange headwinds.
The company said adjusted diluted earnings per share (EPS), excluding Canada, for the six months to end-June rose 1.7% at constant exchange rates thanks to improved operating performance and cost discipline.
Group revenue declined 2.2% to £12.07bn on a reported basis due to currency pressures, but rose 1.8% at constant exchange rates. Profit from operations increased 19.1% to £5.07bn, helped by a favourable adjustment to the Canadian litigation provision.
Improved sales in combustibles and the rollout of the Velo Plus nicotine pouch, which also helped stabilise volume and value share, supported the rebound in the US. The group’s New Categories portfolio, which includes smokeless products, gained traction globally, now contributing more than 18% of total group revenue.
BAT said it added 1.4-million new consumers across its smokeless brands in the period and expected further growth in the second half as it expanded its innovation pipeline. Though the business continued to perform well in Europe and the Americas, it faced regulatory and fiscal pressure in markets such as Bangladesh and Australia.
The company’s New Categories unit posted improved margins and returns while operating cash flow came under pressure, largely due to working capital movements, but BAT said it remained committed to strong shareholder returns.
The group increased its share buyback programme to £1.1bn and reaffirmed its full-year targets, including top-end revenue growth, improved margins and continued deleveraging.
“I am very pleased with our performance in the US. Revenue and profit are both up for the first time since 2022 and, alongside the successful launch of Velo Plus, our combustibles volume and value share performance have returned to growth. AME (Americas and Europe) continued to perform strongly, while our performance in APMEA (Asia-Pacific, Middle East and Africa) has been impacted by fiscal and regulatory challenges in Bangladesh and Australia,” CEO Tadeu Marroco said.
“I am confident that the investments we have made and actions we are taking, will drive a return to our midterm algorithm in 2026.”
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