British American Tobacco reaffirms full-year outlook, more cautious for 2026
By Abigail Townsend
Date: Tuesday 09 Dec 2025
(Sharecast News) - Shares in British American Tobacco came under pressure on Tuesday, despite the owner of Lucky Strike unveiling plans to return £1.3bn to shareholders, after expectations for the coming year were tempered slightly.
Updating on second-half trading, the blue chip said it expects group revenues to come in around 2% higher at constant rates, despite a 2% decline in global tobacco industry volume.
BAT, which also owns Dunhill and Pall Mall, said it had seen "strong" US revenue and profit momentum during the period.
That was driven by both traditional combustibles and an "excellent" performance from its tobacco pouch brand Velo Plus, which is on track to become profitable this year.
Overall, new category revenue growth accelerated to double digit in the second half, contributing to a mid-single digit for the full year. New category products include pouches, vapes and heated products.
BAT acknowledged that the new category market in the US continued to be undermined by illegal vapes, but said it had seen early signs of enforcement action at both a Federal and state level.
Tadeu Marroco, chief executive, said: "Full-year delivery remains on track.
"I am particularly pleased with our momentum in the US, the world's largest nicotine value pool.
"Strengthened combustibles performance and enhanced commercial execution reinforce our future confidence."
However, while BAT reaffirmed guidance for 2026 - and announced plans to return to £1.3bn to shareholders - it said the performance would be at the lower end of the range.
It is currently forecasting revenues to grow by between 3% and 5% in 2026, and adjusted diluted earnings per share by between 5% and 8%.
As at 0915 GMT, the stock - which has put on 40% so far this year - was off 4% at 4,135p.
Marroco said: "While there is more to do, we continue to prioritise investment in our most profitable markets and categories, driving accelerating new category contribution in line with our quality growth approach.
"We remain confident in delivering our mid-term algorithm next year."
Richard Hunter, head of markets at Interactive Investor, said: "Considering the ever-increasing list of headwinds which affect the sector, BAT is making sustained progress.
"A slightly stretched valuation and an element of profit taking may have taken some of the shine form the update but the market consensus of the shares as a 'buy' reflects ongoing optimism that the group can continue to flourish."
Derren Nathan, head of equity research at Hargreaves Lansdown, said: "The company is confident of returning to its medium term growth ambition next year, albeit at the lower end [of forecast ranges].
"The strong recovery in the share price this year suggests market may have been hoping for more, but a new share buyback programme should keep markets happy for now."
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