BAT Upgrades Revenue Guidance and Announces £1.1bn Share Buyback for 2025

Right then. British American Tobacco (BAT) just dropped a significant update that’ll have shareholders and market watchers leaning in. Today’s RNS is packed with upgraded guidance, strategic shifts, and a chunky shareholder return – classic BAT, but with some compelling twists.

Headline Grabbers: Upgraded Guidance & £1.1bn Buyback

BAT isn’t just treading water; it’s signalling confidence. Two things leap out:

• Revenue Upgrade: Full-year revenue growth is now expected at 1-2%, slightly ahead of previous guidance (c.1%). This isn’t explosive, but in the current climate, it’s a solid nudge upwards.
• Shareholder Cash Splash: The real headline is the £1.1 billion share buyback for 2025. That’s a material increase and a clear signal of BAT’s confidence in its cash generation and commitment to returning capital. Combine this with their progressive dividend policy, and shareholders have tangible reasons to smile.

Breaking Down the Performance: Regions & Categories

Digging deeper, the story is one of regional divergence and category transformation:

Regional Highlights: US Resurgence vs. APMEA Headwinds

• US: The Comeback Kid. Crucially, BAT expects both revenue and profit growth in the US for H1 and the full year. This turnaround is driven by:
  • A strengthening Combustibles performance (stabilising share, gains in premium brands like Natural American Spirit/Lucky Strike).
  • An “excellent” launch of Velo Plus Modern Oral pouches, driving triple-digit revenue growth and significant share gains.
• AME (Africa & Middle East): Steady as She Goes. Continued strong performance, led by markets like Brazil, Türkiye, and Romania.
• APMEA (Asia-Pacific, Middle East, Africa): Feeling the Pinch. As previously flagged, performance is hampered by material excise hikes and regulatory challenges, particularly in Bangladesh and Australia.

New Categories: Velo Soars, Vuse Fights Illicits, glo Prepares for Lift-Off

BAT’s “New Categories” (Vapour, Modern Oral, Heated Products) remain central to its future. The picture here is mixed but promising:

• Velo (Modern Oral): Injecting Rocket Fuel. This is the standout star. Global volume share is surging (+270bps in key markets), driven by the US launch of Velo Plus and leadership in AME. Expect strong double-digit revenue growth here.
• Vuse (Vapour): Battling the Black Market. Global value share leadership remains, but the category is significantly hampered by the “proliferation of illicit Vapour products” in the US and Canada. This drags H1 revenue down mid-teens. H2 expects improvement with the roll-out of the new premium Vuse Ultra device.
• glo (Heated Products): Gearing Up for H2. Performance YTD reflects a tough Japan market and legacy product phase-out. The spotlight is on the encouraging launch of glo Hilo in Serbia (doubling trial-to-conversion rates). Expect low-single digit H1 growth, accelerating in H2 as glo Hilo rolls out in key markets.

Overall New Categories Outlook: Low-single digit revenue growth in H1, accelerating to mid-single digit for the full year. Strikingly, excluding the US/Canada Vapour impact, New Categories would be delivering double-digit growth.