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BAT misses revenue forecasts; takes £6bn charge over Canada lawsuit

BAT misses revenue forecasts

British American Tobacco Global Headquarters in London

British American Tobacco reported a £6.2 billion hit from a long-running lawsuit in Canada on Thursday, and warned of "significant" headwinds in Bangladesh and Australia in 2025 after annual revenue missed forecast.

Health risks associated with tobacco and smoking alternatives have been under regulatory scrutiny for several years, and cigarette makers are facing several challenges globally from policy shifts to anti-tobacco activism.


BAT, the maker of Lucky Strike and Dunhill cigarettes, and some of its rivals were set to pay C$32.5 billion (£18.22bn) to settle a long-running case in Canada, but some parties, including Philip Morris International's Canadian affiliate, have since objected to the proposal.

In Australia and Bangladesh, meanwhile, BAT said tax increases would hurt its tobacco business.

Chief executive Tadeu Marroco said these represented “significant regulatory and fiscal headwinds” that would dent its performance this year, but their impact would recede into 2026.

BAT's investments would also start to pay off by the end of the year, helping bring the company back to its targeted revenue growth of between 3 and 5 per cent by 2026, he said.

The company expects 2025 revenue to grow about 1 per cent at constant currency rates, and performance is projected to be weighted towards the second half of the year.

Revenue for the 12 months ended December 31 was £25.87bn and adjusted profit stood at 362.5 pence per share, compared with expectations of £26.11bn and 362.2 pence, respectively, according to a company-compiled poll.

Revenue was down 5.2 per cent, primarily attributed to the sale of its businesses in Russia and Belarus in 2023, coupled with unfavorable foreign exchange rates. However, the tobacco giant highlighted a 1.3 per cent organic revenue growth at constant rates, fueled by an 8.9 per cent surge in its New Categories segment, which includes vapour, heated tobacco, and oral products.

BAT's combustibles business demonstrated resilience with a 0.1 per cent organic revenue increase, driven by pricing strategies that offset lower volumes.

The company also announced a significant turnaround in profitability, reporting a £2.73bn profit from operations, a stark contrast to the £15.75bn loss in 2023. This improvement, however, includes a £6.2 billion provision for a proposed settlement in Canada.

Reported profit from operations of £2,736m (2023: loss of £15,751m) with 2024 including the £6.2bn provision in respect of the proposed settlement in Canada, while 2023 was negatively impacted by one-off impairment charges largely in the US.

BAT's New Categories segment emerged as a key growth driver, with a £251 million increase in contribution, and the category's margin reaching 7.1 per cent, a substantial 7.1 percentage point rise from the previous year. The company's adjusted organic profit from operations also saw a modest 1.4 per cent increase.

Looking ahead, BAT plans to continue its focus on New Categories, aiming to accelerate growth and profitability in this segment. The company said it added 3.6 million adult consumers (to a total of 29.1 million) of its smokeless products, which now account for 17.5 per cent of group revenue, an increase of 1.0 ppts vs FY23.

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