British American Tobacco retains guidance, eyes H2 improvement

Cigarettes, tobacco and vape manufacturer British American Tobacco said it remains on track to hit guidance this year despite first-half underlying revenues and adjusted profits falling by low-single digits.

The company still expects to deliver low-single digit increases in both revenue and adjusted profit on an organic, constant-currency basis in 2024, with results weighted to the second half as previously highlighted.

BAT said growth is still expected to accelerate in the second half due to the phasing of innovation in the New Categories division, along with benefits of first-half investment in US commercial actions and related wholesaler inventory movements.

As for the first half, the company said that results reflect "ongoing macroeconomic pressures", especially in the US.

Combustibles industry volumes have fallen 9% over the year to date, though BAT's cigarette volume share has risen 30 basis points (bps) across its top key eight markets, which represent 65% of the division's revenue.

In the New Category division, Vuse maintained a 41.1% share of the vapour market across key markets, with gains in Africa and the Middle East offset by falls in the US due to the "continued lack of effective enforcement against the growing illicit vapour segment", BAT said.

In Tobacco Heating Products, where it operates under the brand glo, volume share has fallen 20bps to 16.8% so far this year, though BAT noted "sequential category volume share improvement since January in key markets".

Meanwhile, the Velo nicotine pouch brand has achieved strong revenue and profit growth, with volume share in key markets up 80bps at 10.3%.

"Looking forward, we expect growing momentum in the second half, enabled by the investments we are making today," said chief executive Tadeu Marroco.

"As we continue our journey towards building a Smokeless World, guided by our refined strategy, we will progressively improve our performance to deliver 3-5% revenue, and mid-single digit adjusted profit from operations growth on an organic3 constant currency basis by 2026."