Key Highlights

  • British American Tobacco p.l.c. (LSE:BATS) expects 2026 Revenue growth at the lower end of its 3% to 5% range, with mid-teens growth in New Categories.
  • First-half revenue rose 2.9% at constant currency to £12,235 million, and New Categories revenue grew 18% to £1,928 million.
  • Smokeless products accounted for 19.8% of group revenue, with 35 million consumers.
  • A £1.3 billion share buyback is on track for 2026.

Why BAT Is in Focus Today

British American Tobacco p.l.c. (LSE:BATS), owner of Lucky Strike, Dunhill, Vuse, Velo and glo, is in focus on the FTSE 100 after the US midterm elections reshaped the political landscape in Washington. On Wednesday, 4 November 2026, Democrats won control of both the Senate and House, and the FTSE 100 rose 1.8%. The United States is BAT's largest market, and regulation of vapour and nicotine pouches by the Food and Drug Administration is a key driver of its growth outlook. Changes in Congress could influence debates on tobacco regulation, illicit vapes and taxation.

Investors are also looking ahead to BAT's pre-close trading update, typically published in early December, which will confirm how the year is ending.

First-Half Results Recap

In its half-year report on 30 July 2026, BAT said its performance was in line with expectations and that it was confident in full-year guidance. Revenue rose 1.4% at actual rates and 2.9% at constant currency to £12,235 million, driven by the United States, where revenue grew 8.5%. New Categories revenue increased about 18% at constant currency to £1,928 million. Smokeless products reached 19.8% of group revenue, up 1.6 percentage points from 2025, and the number of smokeless consumers rose to 35 million.

Velo, BAT's nicotine pouch brand, has been the standout performer. Velo Plus in the US has delivered triple-digit growth and reached the number two position in Volume and value share. In the second half, BAT planned to roll out Velo Max nationally in the US alongside a select range of adult-focused Vuse flavours, following FDA prioritisation guidance for vapour and modern oral products.

Guidance

BAT expects 2026 revenue growth at the lower end of its 3% to 5% range, adjusted profit from operations growth of 4% to 6%, weighted to the second half, and adjusted Diluted Earnings per Share growth toward the middle of its 5% to 8% range. Global cigarette industry volumes are expected to fall by around 3%. The group expects Operating Cash Flow conversion above 95%.

Shareholder Returns

BAT has a long record of Dividend growth, with 2025 marking its 27th consecutive year of dividend increases in sterling. It is running a £1.3 billion share buyback in 2026, supported by high cash conversion and proceeds from earlier sales of shares in ITC, its Indian associate.

Market Context on 4 November

The US election result may affect federal debates on nicotine regulation, though the FDA's processes and state-level actions matter most for BAT's US business. Enforcement against illicit vapes has helped Vuse volumes recover. A weaker dollar affects the sterling value of BAT's US earnings. Defensive stocks such as tobacco often lag in broad risk-on rallies, as investors favour cyclical sectors such as banks and miners, which led Wednesday's gains.

Combustibles Still Matter

Although the transformation to smokeless products is central to BAT's strategy, traditional cigarettes still generate the large majority of revenue and profit. Pricing power has allowed BAT to offset falling volumes in many markets, and the US combustibles Business has shown resilience. Cash flow from cigarettes funds Investment in new categories, dividends and buybacks. Investors watch the balance between declining cigarette volumes and price increases closely, as well as the rate at which smokeless products replace lost cigarette profits. BAT targets 50% of revenue from smokeless products by 2035 and 50 million smokeless consumers by 2030, ambitious goals that depend on continued regulatory progress and consumer adoption in key markets.

Risks to Consider

Risks include stricter regulation, higher excise taxes, declining cigarette volumes, illicit trade, litigation, currency movements and competition in nicotine pouches. Any setback in Velo or Vuse growth would affect the transformation story.

What Investors Are Watching Next

The pre-close trading update in early December is the next key event, followed by full-year results in February 2027. Investors will focus on New Categories growth, Velo and Vuse performance in the US, combustible pricing, cash flow and the 2027 buyback for British American Tobacco p.l.c. (LSE:BATS).