Top Takeaways:
- British American Tobacco (BAT) has increased its annual sales growth forecast to 1%–2%, citing stronger-than-expected first-half revenue and improving U.S. market performance.
- The company’s “New Categories” segment, encompassing vapes, tobacco heating products, and oral nicotine pouches, is projected to achieve mid-single-digit revenue growth for the year.
- Despite challenges from illicit flavored disposable vapes and regulatory pressures, BAT anticipates a return to profit growth in the U.S. market for the first time in three years.
British American Tobacco (BAT) has revised its annual sales growth target upward to 1%–2%, attributing the adjustment to better-than-anticipated revenue in the first half of the year and a rebound in U.S. sales.
The company’s “New Categories” division, which includes products like vapes, tobacco heating devices, and nicotine pouches, is expected to see mid-single-digit revenue growth in 2025. The projection comes despite ongoing challenges from unauthorized flavored disposable vapes in the U.S. and Canada, which have impacted the legal vapor market, according to press release.
BAT’s CEO, Tadeu Marroco, expressed optimism about the company’s performance, stating that while the traditional combustibles segment faces volume pressures, BAT has stabilized its overall market share. He also highlighted the significant growth in the U.S. market, which accounted for 44% of BAT’s total revenue in 2024.
In addition to operational improvements, BAT has taken strategic financial steps, including increasing its 2025 share repurchase target to £1.1 billion following the sale of a $1.5 billion stake in Indian consumer goods company ITC.
Despite these positive developments, BAT continues to navigate legal and regulatory challenges, such as a £6.2 billion charge related to a Canadian lawsuit and tax headwinds in markets like Bangladesh and Australia.
As BAT focuses on expanding its presence in non-combustible products, the company aims to increase the contribution of its “New Categories” to overall revenue, aligning with industry trends and consumer preferences.
