BAT 2024 Results Summary: New Business Earnings Growth,Despite 5.2% Revenue Decline

Key points:

Performance in 2024: Despite a 5.2% decrease in reported revenue, organic revenue increased by 1.3%. The new tobacco business achieved profitability two years ahead of schedule, contributing an additional £2.51 billion in growth.

Progress of new tobacco products: The global number of adult users of new tobacco products has reached 29.1 million, accounting for 17.5% of company revenue.

Progress in harm reduction strategy: Continuing to advance the "Omni™ Declaration" and responsible product development, emphasizing collaboration with regulatory agencies.

Projected for 2025: Focus on execution and deployment, with expected annual revenue growth of 1% and profit growth of 1.5-2.5%; the second half of the year will be the main driver of growth.

Sustainable Development Goals: Reduce harm, climate, nature, recycling, community.

Board Changes: Soraya Benchikh appointed as Chief Financial Officer, Uta Kemmerich-Keil appointed as Independent Director.

On April 16, British American Tobacco (BAT) held its annual shareholders' meeting for the year 2025, where the BAT chairman provided a systematic summary of the company's operating results in 2024 and outlook for 2025, reaffirming their strategic direction towards a "smoke-free world." In 2024, which was a year for investment deployment, the group's financial performance met initial expectations. 

With reported exchange rates, the group's total revenue decreased by 5.2% year-on-year; however, it grew by 1.3% on a constant currency and organic basis. Adjusted organic operating profit increased by 1.4%, with a cash conversion rate of 101%. In particular, the new category tobacco business achieved adjusted growth of £251 million at constant exchange rates, with a category profit margin of 7.1%.

BAT stated that the overall performance showed the business resilience and employee execution ability. The new tobacco business achieved profitability two years ahead of schedule, marking a key milestone in the transformation process.

Become a primarily smoke-free enterprise by 2035, and to promote the establishment of industry standards

In 2023, BAT announced that it has refined its strategy, continuing to focus on the core vision of "building a smoke-free world" and aiming to achieve a revenue structure primarily focused on smoke-free business by 2035. The current number of users of new tobacco products is 29.1 million, accounting for 17.5% of the group's total revenue.

BAT emphasizes that driving transformation relies on precise execution, continuous product innovation, and responsibly meeting the preferences of adult consumers.

British American Tobacco (BAT) has stated that the promotion of new tobacco products should be based on harm reduction principles, and has pointed out that New Zealand and Sweden have already achieved or are close to achieving their "smoke-free" national goals. This demonstrates the positive results brought about by regulatory policies supporting harm reduction strategies.

According to BAT's warning, restrictive policies implemented by some countries may have unintended consequences, hindering adult smokers from transitioning to lower-risk alternative products. BAT is calling for enhanced policy dialogue based on scientific evidence, and has outlined five industry development goals through its regulatory position statement on e-cigarette products and the forthcoming release of "Omni™" (set to launch in London in September 2024 and internationally in 2025).

To prevent minors from accessing, including age verification through technological means; promote responsible packaging, marketing, and flavor use; strengthen product safety assessments; increase the recyclability of equipment, such as removable batteries; support effective market supervision and penalties for violations. BAT said it will continue to seek multi-party collaboration with policymakers, regulatory agencies, and public health organizations to promote the establishment of sustainable industry standards.

Deployment priorities and financial expectations for the year 2025

The year 2025 has been dubbed as the "year of deployment," as BAT plans to restore profit growth in the US market and continue to roll out product innovations. Full-year revenue is expected to increase by approximately 1%, with adjusted operating profit growth of 1.5%-2.5% (including a 1.5% headwind from foreign exchange trading). The second half of the year is expected to be the main driver of growth.

The exchange rate factor is expected to have a transformative impact of 2% on annual operating profit. BAT maintains its medium-term goal: from 2026 onwards, it aims to achieve annual revenue growth of 3%-5% and operating profit growth of 4%-6%.

In terms of cash flow, BAT expects to generate over £50 billion in free cash flow between 2024 and 2030, maintaining capital allocation discipline, including:

Continue investing in transformation; balance deleveraging, dividend growth, and share buybacks; selectively pursue small-scale mergers and acquisitions to accelerate the transformation process. BAT has announced a 2% increase in dividends by 2025 and will implement a £9 billion share buyback.

Since the last shareholders' meeting, there have been changes to the board of directors. Soraya Benchikh was appointed as Chief Financial Officer and Director in May 2024, while in February 2025, Uta Kemmerich-Keil joined the board as an independent non-executive director and also joined the audit and nomination committee. Murray Kessler became a non-executive director in November 2024 but stepped down in February 2025 to focus on his recent appointment as CEO of Wellington International LLC.