BAT stays on track for FY guidance as Velo growth lifts New Categories
August 5, 2025
British American Tobacco (BAT) reported a steady first half for 2025, with revenues slightly ahead of expectations and signs of renewed momentum in its US and New Category operations, particularly through its flagship nicotine pouch brand, Velo.
Despite a 2.2 per cent decline in reported revenue, largely due to adverse currency movements, revenue rose 1.8 per cent at constant exchange rates. A rebound in the US business – driven by stronger performance in combustibles and the successful launch of Velo Plus – helped lift overall results.
In the US, revenue and profit were both up for the first time since 2022.
BAT’s New Categories segment, which includes vapour, modern oral, and heated tobacco products, generated revenue of £1.65 billion – broadly flat compared to the same period last year, but up 2.4 per cent at constant currency. New Categories now contribute 18.2 per cent of Group revenue, a 70 basis point increase from FY24.
Chief Executive Tadeu Marroco said the company was “firmly on track” to meet its full-year guidance and described the half-year performance as “slightly ahead of expectations.”
“Velo continues to go from strength to strength in the fastest growing New Category,” said Marroco. “Our Quality Growth focus, prioritising investment in the largest profit pools, delivered higher returns, with New Category contribution up 38.6 per cent at £179 million at constant currency, and further improvement expected for the FY.”
BAT added 1.4 million new consumers to its smokeless brands in H1, bringing the total to 30.5 million. Contribution margin from New Categories increased by 2.8 percentage points to 10.6 per cent at constant currency, with profit contribution from the category rising 38.6 per cent to £179 million.
The company said a phased roll-out of innovations is expected to accelerate New Category performance in the second half.
While AME (Americas and Europe) continued to perform strongly, performance in APMEA (Asia-Pacific, Middle East, and Africa) was impacted by fiscal and regulatory challenges in markets like Bangladesh and Australia.
Group-wide, BAT reported a 19.1 per cent increase in profit from operations, with a 7.5 percentage point improvement in operating margin to 42.0 per cent. This included a one-off benefit from a revised Canadian legal provision and a comparison to impairment charges in the prior year. Adjusted profit from operations rose 1.9 per cent at constant currency.
Diluted EPS rose 1.6 per cent to 203.6p, with adjusted diluted EPS up 1.7 per cent at constant currency. The group has also increased its 2025 share buy-back programme by £200 million to £1.1 billion.
