By Emma Rumney and Shashwat Awasthi
London — British American Tobacco (BAT) on Thursday announced an AI-driven productivity programme that is expected to lead to job cuts, even though annual profit rose as its Velo nicotine pouch gained US market share and sales of newer products picked up.
Interim finance chief Javed Iqbal said the programme would simplify and automate using data analytics and AI tools, adding it would “affect staffing levels”.
“It will have an impact on the size of the organisation,” he said on a call, but noted it was too early to say how much of the workforce would be affected.
BAT shares, which surged 46% last year, were down 2.3% at 4,325p in afternoon trading.
Gaining ground
The productivity drive comes as Velo is winning market share from Philip Morris’ Zyn and Altria’s On! in the US, thanks to features such as higher nicotine content and cheaper prices.
“We are extremely encouraged by the US performance of Velo,” CEO Tadeu Marroco said on the call. “There is still plenty of opportunity for Velo to carry on growing.”
The brand now has the second-biggest market share in the US, behind Zyn, and is part of BAT’s suite of newer products, including its Vuse vape and heated tobacco, in which it is investing heavily to spur growth.
BAT’s revenue from new products increased by double digits in the second half and by 7% for the year through December. Adjusted earnings per share rose 3.4% to 340.5p.
Anthony Sedgwick, co-founder of BAT investor Abax Investments, said newer products were growing rapidly and had become integral to BAT’s business.
That has raised the appeal of tobacco companies compared to other consumer firms struggling with growth and against which tobacco stocks have traded at a discount, he said.
Newer smoking alternatives accounted for 18.2% of BAT’s total sales in 2025, up from 17.5% in 2024.
Diluted vapours
CEO Marroco said Vuse’s performance was improving, even as its vapour products continue to be hurt by unregulated vapes on the market.
He said regulatory efforts to address illicit vape sales have helped slightly but warned it would take time for market conditions to improve, and forecast a flat US vape performance in 2026.
Additionally, BAT has struggled in Australia and Bangladesh, with demand in Australia hurt by rising duties and a growing illicit cigarette market. In Bangladesh, higher taxes and minimum-price regulations have pressured sales.
Iqbal said Australia would continue to be a drag in 2026.
Revenue from the Asia-Pacific, Middle East and Africa segment fell more than 7% in 2025, tempering overall group revenue growth to 2.1%, compared with 1.3% growth in 2024.
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