**Summary**
British American Tobacco (BAT) released its preliminary results for the year ended December 31, 2025, highlighting significant growth and strategic achievements. Key points include
1. **Smokeless Products Growth**BAT added 4.7 million consumers to its Smokeless brands, reaching a total of 34.1 million. Smokeless products now account for 18.2% of Group revenue, up 70 basis points from FY24.
2. **Revenue Performance**Reported revenue decreased by 1.0% due to currency headwinds but increased by 2.1% at constant FX. This growth was driven by combustibles and Velo Plus in the U.S., along with multi-category growth in AME (Americas and Europe), partially offset by APMEA (Asia-Pacific, Middle East, and Africa).
3. **New Categories Acceleration**New Categories revenue growth accelerated to double-digits in H2, with a full-year growth of 7.0%. The contribution from New Categories increased by 77.1% to £442 million, supported by the Quality Growth approach.
4. **Profitability**Reported profit from operations surged by 265%, primarily due to the movement in the Canadian settlement provision. Adjusted profit from operations grew by 2.3%, with an adjusted operating margin of 44.0%.
5. **Earnings and Dividends**Reported diluted EPS increased by 157% to 349.1p, while adjusted diluted EPS rose by 3.4%. The company announced a 2.0% dividend growth to 245.04p and a £1.3 billion share buy-back program for 2026.
6. **Strategic Initiatives**BAT launched three premium innovations—Vuse Ultra, glo Hilo, and Velo Shift—with encouraging early results. The company is confident in sustainably delivering its mid-term growth algorithm, with 2026 performance expected at the lower end of the range.
7. **Financial Flexibility**BAT is on track to reduce leverage to within 2.0-2.5x by the end of 2026, supported by strong cash conversion.
8. **Regional Performance**The U.S. business delivered strong growth, driven by combustibles and Velo Plus. AME saw multi-category growth, while APMEA faced challenges in Bangladesh and Australia.
9. **Sustainability and Innovation**BAT continues to embed sustainability across its business, achieving significant environmental milestones and setting new 2030 targets. The company also expanded its Btomorrow Ventures investments and launched functional wellness products under the Ryde brand.
10. **Operational Review**BAT initiated a Fit2Win program to enhance efficiency and agility, expected to generate £600 million in annualized cost efficiencies by 2028.
Overall, BAT demonstrated resilience and strategic progress in 2025, positioning itself for sustainable growth and shareholder value creation in the coming years.
