How Is British American Tobacco Plc (LSE:BATS) Trading Today?

British American Tobacco Plc (LSE:BATS) shares were little changed at around 4,603.0p today, as investors consider a half-year report that was in line with the company's expectations and kept full-year guidance in place.

For the six months to 30 June 2026, Revenue was £12,235 million, up 1.4% as reported and 2.9% at constant exchange rates. Adjusted profit from operations rose 3.5%, and the adjusted Operating Margin improved by 30 basis points to 43.7%.

The report also showed continued progress in the group's transformation towards smokeless products, which now account for 19.8% of group revenue.

About British American Tobacco Plc

British American Tobacco is a multinational consumer goods group with a portfolio that includes combustible cigarettes and a growing range of smokeless products. Its New Categories include vapour products such as Vuse, tobacco heated products such as glo, and modern oral products such as Velo.

The group operates in markets across the world, reporting through three regions: the US, Americas and Europe (AME), and Asia-Pacific, Middle East and Africa (APMEA). It has a long record of paying dividends and has set a priority on delivering Dividend growth in sterling terms.

LSE:BATS is a large constituent of the UK consumer staples sector, known for its cash generation.

H1 2026 Financial Performance

Revenue growth was led by the US, where revenue rose 8.5% on a multi-category delivery, while AME revenue increased 0.9%. Combustibles revenue grew 2.1% at constant currency, supported by price and mix, and the group continued to invest in key markets.

Adjusted diluted EPS rose 7.9%, and the group now expects full-year adjusted diluted EPS growth towards the middle of its 5% to 8% guidance range. Management confirmed it is on track for its full-year 2026 guidance.

New Categories and Modern Oral

New Categories revenue increased 18.0%, with the contribution margin rising 3.3 percentage points to 13.8%. Modern Oral, now the largest New Category by revenue, grew 65.9%, supported by the performance of Velo Plus in the US and double-digit growth in AME and APMEA.

BAT achieved a 39.2% Volume share in its top modern oral markets, up 8.4 percentage points from the full-year 2025 level. In the second half the group plans to roll out Velo Max nationally in the US, together with a disciplined roll-out of selected adult-focused Vuse flavours.

The number of consumers of smokeless products reached 35.0 million, and management expects mid-teens New Categories revenue growth for the full year.

US Regulatory Backdrop

In the US, recently published FDA prioritisation guidance for vapour and modern oral products, together with federal and state enforcement actions, is expected to support companies with compliant, multi-category portfolios. BAT said it is well positioned to benefit from this environment.

The group also noted that its US combustibles volume share has started to stabilise after increased Investment in response to competitive activity.

Capital Returns and Leverage

The group's share buyback programme remains on track for £1.3 billion in 2026. Management said Leverage is expected to be within the 2.0 to 2.5 times adjusted net Debt to adjusted EBITDA corridor by year end.

Together with its commitment to dividend growth in sterling terms, these measures form the core of BAT's Shareholder return framework.

Second-Half Outlook

As previously guided, management expects adjusted profit from operations to accelerate in the second half, helped by improvements in AME and APMEA and the phasing of future cost savings. Global cigarette industry volume is expected to be down around 3% for the year.

The group describes its transformation as building momentum, with Leadership in modern oral and a broadening multi-category presence in the US.

Growth Catalysts

The main catalysts for LSE:BATS include continued growth in modern oral, expansion of the Velo and Vuse ranges, improving New Category profitability and cost savings through the group's productivity programmes. Rising smokeless adoption could also raise the proportion of revenue from newer categories over time.

Disciplined Capital allocation, including the buyback and reduced leverage, adds to the financial framework.

Factors to Monitor

The group operates in a regulated industry, and rules, excise changes and currency movements in different markets can influence results. Competitive activity and consumer behaviour in New Categories are additional factors.

Investors typically follow New Category growth, margin progress, regional performance and capital return updates.

Conclusion

British American Tobacco's steady share price of around 4,603.0p today follows half-year results with revenue up 1.4%, adjusted EPS up 7.9% and smokeless products reaching 19.8% of revenue.

Modern oral growth, US regulatory developments, leverage and capital returns remain the central themes for LSE:BATS.