Image source: Shutterstock

Highlights

  • Full-year guidance upgraded: adjusted profit from operations to rise by 1.5%–2.5%.

  • Return to revenue and profit growth in the US, supported by cigarettes and nicotine pouch sales.

  • New Category products set for accelerated growth in H2 with Velo and Vuse innovations.

British American Tobacco PLC (LSE:BATS) has revised its full-year outlook upward for 2025, citing a return to growth in the US market and continued momentum in product innovation despite ongoing challenges from unregulated vaping products.

The FTSE 100-listed company now expects revenue growth of 1% to 2% for 2025, slightly ahead of its earlier projections. This is anticipated to support adjusted profit from operations growth of 1.5% to 2.5% for the year. The upgrade comes as BAT reports improving performance in its largest market, the United States.

The Group confirmed that both revenue and profit in the US are expected to grow in the first half and full year, led by a recovery in its Combustibles division and the successful launch of its Velo Plus nicotine pouch brand. While cigarette volumes across the broader industry remain under pressure—down approximately 9% year to date—BAT reported gains in total volume and value share. Growth was attributed in part to its Natural American Spirit and Lucky Strike cigarette brands.

BAT’s portfolio of New Category products, including nicotine pouches, heated tobacco, and vapour products, is projected to record low single-digit revenue growth in the first half of the year. This segment is expected to accelerate in the second half as product rollouts intensify across key markets. Chief Executive Tadeu Marroco described 2025 as a "deployment year", with stronger performance forecast for the second half due to mid-year launches of New Category innovations.

Sales of Velo pouches increased at triple-digit rates, while the company noted a decline in market share for its Glo heated tobacco products in select markets. However, BAT anticipates second-half growth for Glo through the phased release of the new Glo Hilo range.

The company continues to face challenges in its vaping business. Vuse, BAT’s vapour brand, has been adversely affected by illicit vapour products in the US and Canada. Nonetheless, BAT expects a recovery in the second half, aided by the introduction of Vuse Ultra.

Financially, the Group expects to achieve an operating cash flow conversion rate of over 90% for the year. It has increased its share buyback programme to £1.1 billion and is targeting a reduction in leverage over the next two years.