British American Tobacco Reports Mixed Half-Year Results Amid Transition to New Categories
Why we think this is neutral
While BAT shows resilience with increased operating profit and maintained full-year guidance, there are notable challenges. Revenue declined 2.2% (though up 1.8% at constant currency), and free cash flow before dividends fell significantly by 42.1%. The company's transition to New Categories products is progressing, with consumer numbers growing, but faces headwinds in some markets and ongoing regulatory pressures. The decline in combustibles volume and mixed performance across regions indicate a complex operating environment. Despite these challenges, BAT's strong market position and strategic focus on smokeless products provide some stability, resulting in a balanced outlook.
Key Points
- Revenue down 2.2% to £12,069 million, but up 1.8% at constant currency rates
- Operating profit increased 19.1% to £5,069 million
- Adjusted diluted EPS decreased 4.3% to 162.0p
- Free cash flow before dividends down 42.1% to £1,234 million
- Added 1.4 million consumers of smokeless products, now totaling 30.5 million
- Maintained full-year guidance with revenue growth expected at top end of 1.0-2.0% range
- Facing challenges in Asia-Pacific, Middle East and Africa markets
- Continuing focus on transformation to New Categories products
Summary
British American Tobacco's half-year results for 2025 present a mixed picture. Revenue decreased by 2.2% to £12,069 million, though it increased by 1.8% at constant currency rates. Operating profit rose by 19.1% to £5,069 million, while adjusted diluted EPS fell by 4.3% to 162.0p. The company added 1.4 million consumers of smokeless products, now totaling 30.5 million. However, free cash flow before dividends decreased significantly by 42.1% to £1,234 million. BAT maintained its full-year guidance, expecting revenue growth at the top end of 1.0-2.0% and adjusted profit from operations growth of 1.5-2.5%. The company faces challenges in some markets, particularly in Asia-Pacific, Middle East and Africa, but continues to focus on its transformation to New Categories products.