British American Tobacco (BAT) said it remains on track to deliver its full-year 2025 targets, with momentum building across New Categories in the second half and early signs that tougher enforcement is starting to curb illicit vaping in the US.
In a full-year pre-close trading update this week, the group said it now expects around 2 per cent revenue growth and a similar increase in adjusted profit from operations for FY25, while reaffirming its mid-term growth guidance from 2026.
BAT also announced a £1.3bn share buy-back programme for FY26, citing strong cash generation and improving balance sheet flexibility.
For the vape and nicotine sector, BAT highlighted improving performance in vapour and strong growth in modern oral. Group New Category revenue is accelerating to double-digit growth in H2, delivering mid-single digit growth for the full year.
Vuse sees US improvement
BAT said recent improvements in Vuse volumes and revenues in the US were encouraging, pointing to early signs of increased federal and state-level enforcement against illicit vapour products. The company believes stronger enforcement over time should support further recovery in the legal vapour market.
Globally, Vuse maintained leadership in tracked channels, with value share gains in the US offsetting pressure in Canada, where illicit products continue to weigh on the category. BAT expects full-year vapour revenue to be down high single digits, an improvement on the 13 per cent decline seen in the first half.
Premium innovation Vuse Ultra is also delivering “encouraging early results” in priority launch markets including Canada, Germany and France, as BAT targets what it describes as an underdeveloped premium vapour segment.
Velo drives modern oral growth
Modern Oral remained the standout New Category, with Velo delivering strong double-digit revenue growth and significant share gains across key markets. In the US, Velo Plus helped drive triple-digit revenue growth, with BAT expecting the modern oral category to reach profitability at a category contribution level for the full year.
BAT described modern oral as its fastest-growing New Category, underpinned by strong performance in the US and Americas & Europe (AME) region.
Heated products and wider outlook
Heated products revenue was broadly flat for the year, impacted by competitive pressure and resource reallocation ahead of the rollout of the new glo Hilo platform. Premium launches took place in Japan, Poland and Italy during H2, with further roll-outs planned for 2026.
Resilient combustibles performance also underpinned group delivery, with BAT pointing to strong results in the US and the AME region. Group value share across top cigarette markets was flat for the year, with US value share up 20 basis points and volumes holding steady.
Chief executive Tadeu Marroco said the group was particularly pleased with momentum in the US, “the world’s largest nicotine value pool”, adding that strengthened combustibles performance alongside progress in New Categories was reinforcing confidence in BAT’s medium-term outlook.
“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,” Marroco said. “We remain confident in delivering our mid-term algorithm next year.”
Looking ahead, BAT said it remained confident of delivering its growth algorithm from 2026, targeting revenue growth of 3-5 per cent and continued acceleration in New Category contribution, while reducing leverage to within its 2.0–2.5x target range by the end of 2026.