BAT H1 2025 Trading Update: Revenue Beats Expectations, Full-Year Growth Forecast at 1–2%

Key Points:

·British American Tobacco (BAT) has released its trading update for the first half of 2025, with revenue slightly higher than expected. It is projected that full-year revenue will increase by 1-2% and adjusted operating profit will increase by 1.5%-2.5%.

·The United States is expected to see a recovery in revenue and profit growth in the first half of the year and throughout the 2025 financial year, driven by increased deliveries of combustible cigarettes and strong performance from Velo Plus. 

·Velo has achieved strong global growth in the rapidly expanding modern oral category. 

·glo Hilo has been deployed in key markets to accelerate revenue growth in the new category in the second half of the year. 

On June 3, 2025, British American Tobacco (BAT) announced on its official website that its performance for the 2025 financial year is progressing steadily, with revenue in the first half of the year surpassing that of the same period in 2024. The company currently expects revenue to increase by 1-2% and adjusted operating profit to increase by 1.5%-2.5% for the 2025 financial year, based on fixed exchange rates.

BAT's announcement indicates that performance in 2025 is expected to be stronger in the second half of the year, primarily due to the introduction of innovative new product categories in key markets starting in the mid-year, particularly with the "Strong global growth from Velo in Modern Oral, the fastest growing New Category segment." At the same time, the promotion of the new generation of heated tobacco product, glo Hilo, in the Serbian market has prepared for its expansion in other core markets in the second half of the year.

The main highlights are summarized as follows:

The US cigarette market is showing signs of recovery: 

·With revenue and profit growth expected in the first half and full year of the 2025 fiscal year. 

·BAT attributes this to strengthening its combustible tobacco products business (although overall industry sales have decreased by about 9%, BAT has stabilized its total market share and value share). 

·The US market share is growing, driven primarily by the cigarette brands Natural American Spirit and Lucky Strike.

Modern oral product Velo continues to show strong growth: 

·In key markets, the market share of oral products has increased by 270 basis points, reaching 14.3%, while the market share of modern oral products has increased by 350 basis points, reaching 29.7%; 

·Driven by industry growth and market share improvement, revenue has grown strongly in double digits; 

·Propelled by Velo Plus, the US market has achieved good performance, with strong trial and retention rates driving the overall market share of modern oral products to 11.9%, and revenue achieving triple-digit growth.

Heating tobacco product glo is expected to see accelerated revenue growth in the second half of the year: 

·Market share has decreased by 90 basis points in major markets, mainly due to intense competition in Japan and the continued elimination of the traditional super-slims platform; 

·Sales share in AME (Asia Middle East Europe) has decreased by 10 basis points, with shares in Poland, the Czech Republic, and Spain continuing to grow, Italy's share remaining stable but offset by competition in Germany and Romania; 

·Conversion rate in Serbia doubled after the launch of Glo Hilo;

·It is expected that revenue in the first half of the year will show low single-digit growth, with accelerated growth in the second half, thanks to the phased promotion of Glo Hilo in major markets.

E-cigarette Vuse is leading in global market share: 

·Global market value share remains steady, continuing to maintain a leading position globally in tracking channels; 

·US value stocks remain steady, AME +10 basis points, driven by +40 basis points in Europe; 

·It is expected that revenue in the first half of the year will decrease by about 15%, mainly due to the impact of the illegal e-cigarette market in the US and Canada; 

·Benefiting from the phased introduction of the new high-end e-cigarette product Vuse Ultra, as well as continued targeted resource allocation, revenue performance in the second half of the year continues to improve.

Chief Executive Officer Tadeu Marroco commented:

"Our first half revenue performance slightly exceeded previous guidance, and we are currently forecasting a 1-2% increase in annual revenue, supporting adjusted operating profit growth of 1.5-2.5%. 2025 is a crucial deployment year, as previously emphasized, with our performance focusing on the second half driven by the promotion of new product category innovations in key markets starting in the middle of the year."