BTI changes
Pick any two versions below to diff them.
- About
- British American Tobacco makes and sells tobacco and nicotine products around the world. Its added: global cigarette brands removed: include added: are Dunhill, added: Kent, Lucky Strike, removed: Newport, added: Pall Mall, and removed: Camel outside added: Rothmans. In the United removed: States. added: States, it also sells Newport, Camel, and Natural American Spirit through Reynolds American. The company also sells New Category removed: products, such as added: products: Vuse vapor devices, glo heated tobacco, and Velo nicotine pouches. added: New Categories gave 15.8% of revenue in the first half of 2026. Most company profit still comes from removed: cigarette sales, but New Category sales are growing fast. added: cigarettes.
- Thesis
- removed: British American Tobacco earns investor trust added: Many investors do not own tobacco stocks, and regulators keep adding rules. Because of this, the market pays less for removed: its pricing power in a shrinking cigarette market. added: each pound of BAT's cash flow, and part of this gap will probably stay. The removed: remaining doubt is about added: market also doubts that New removed: Categories, added: Categories can replace the removed: company's term for added: profit that cigarettes lose. New Categories are BAT's vapor products, removed: nicotine pouches, and heated removed: tobacco. Vuse, glo, added: tobacco, and removed: Velo must reach full profit while regulators tighten rules on vapor products and nicotine removed: pouches added: pouches. Their contribution margin was 13.3% in the removed: United States added: first half of 2026, against 58.0% for cigarettes and removed: Europe. added: other combustibles. BAT now expects global cigarette industry volume to fall about 3% in 2026, up from about 2% in February. For the added: rest of the gap to close, removed: Velo's profit margin must stay near cigarette levels as new pouch rules take effect in France and across the EU. New Category revenue removed: growth must removed: also hold in the mid-teens range that management guided for 2026. BAT has added: keep growing at a removed: new CFO, who started in September 2026. A smooth handover matters for investor trust in capital allocation. BAT held its capital markets day on September 29, 2026. It set Horizon 2030 targets for New Category revenue growth added: mid-teens rate, and added: its contribution removed: margin, and said 2026 growth will be added: margin must keep rising towards added: BAT's target of at least 30% by 2030. Leverage must also return inside 2.0 to 2.5 times adjusted EBITDA by the removed: lower end of removed: its ranges. Full-year added: 2026, as management expects. The pre-close trading update in December 2026 removed: results, expected around added: and the full-year 2026 results on February removed: 2027, will show whether added: 11, 2027 give the next evidence. New removed: Category profit growth offset a cigarette volume decline that BAT itself raised to 2.5% added: EU proposals for removed: 2026. If New Categories keep progressing added: tobacco product rules and removed: BAT completes more debt paydown, added: tobacco taxes can also change the added: outlook for Velo in Europe. If these tests pass, part of the gap can close removed: within a few added: over the next four to six quarters. The main risk is that added: faster cigarette declines or tougher removed: nicotine-pouch added: pouch rules removed: in Europe, or a stumble in the CFO transition, could keep added: hold back New removed: Categories from reaching full profit on schedule. added: Category profit.
- Risks
- BAT removed: raised its 2026 full-year forecast for combustible added: now expects global cigarette added: industry volume removed: decline to removed: 2.5%, up from an earlier estimate added: fall about 3% in 2026. It expected about 2% in February and about 2.5% in June. In the first half of removed: 2%. The core added: 2026, BAT's own cigarette removed: business is shrinking faster than planned. added: volume in the United States fell 5.2%. France banned the removed: manufacture, sale, added: sale and import of nicotine pouches removed: starting added: from April removed: 2026, and added: 1, 2026. In December 2025, France's highest administrative court suspended the added: ban on manufacture and export until it makes a final decision. The EU is removed: drafting new added: also revising its tobacco product rules removed: that added: and tobacco taxes, which could add flavor limits and removed: new excise taxes on pouches. removed: This threatens added: These rules can slow Velo, BAT's fastest-growing product line. added: In May 2026, US removed: federal agencies added: Customs and Border Protection said that a joint operation with the FDA had seized removed: about added: more than 18 million illegal vaping devices worth removed: roughly added: more than $175 removed: million by May 2026, yet only added: million. Only a small number of e-cigarette products hold full FDA marketing authorization. Large volumes of removed: unauthorized added: illegal disposable vapes still compete with Vuse on price. removed: BAT ended 2025 with added: At the end of 2025, BAT's leverage was 2.55 times adjusted removed: net debt added: EBITDA (adjusted for Canada), just above the removed: midpoint added: top of its added: 2.0 to 2.5 times target removed: leverage range. removed: Reaching that target added: BAT expects to return inside the range by the end of 2026 removed: still depends on further asset sales, such as a pending stake sale added: from cash generation. Weak cash flow in removed: ITC Hotels. added: the second half of 2026 could delay this. BAT has a new CFO, Dragos Constantinescu, who started September 1, 2026, and a new Regional Director for Asia-Pacific, Middle East and removed: Africa starting added: Africa, Celina Li, from January 2027. A leadership transition adds short-term execution risk.
- Balance sheet
- Cash: £2.5B Debt: £35.1B Net debt: £32.6B Undrawn credit line: £6.9B Ratings: Moody's Baa1 (stable outlook), S&P BBB+ (stable outlook), Fitch A- (stable outlook) British American Tobacco carries a large debt load from the 2017 purchase of Reynolds American. After £2.6 billion of dividends, free cash flow was negative £349 million in H1 2026, so the dividend and the £1.3 billion buyback depend on stronger second-half cash flow. Most of the debt is unsecured bonds that central finance companies issue and the parent guarantees. Debt includes leases. £386 million of the cash sits in Canada under the court-approved plan that settles Canadian tobacco claims. The group also carries a long-term provision for payments under that plan. Centrally managed bonds have an average maturity of 9.3 years, and no more than 15.1% matures in any 12-month period. About 75% of the debt is at a fixed rate after swaps. The group also has £1.9 billion of perpetual hybrid bonds that it counts as equity. The undrawn credit is a £5.0 billion revolving credit facility and £1.9 billion of added: undrawn bilateral lines. In August 2026, BAT sold $1.5 billion of new US dollar notes due 2033 and 2036. removed: Management targets added: BAT does not publish leverage at the half year. On September 29, 2026, it repeated its target of adjusted net debt removed: of added: at 2.0 to 2.5 times adjusted EBITDA by the end of 2026. The dividend and buyback leave little room to reduce debt faster. As of Jun 30, 2026.
- Checkpoints
- Dec 2026 (estimate): Pre-close trading update: removed: New Category growth added: 2026 guidance and leverage. Pending. Watch: removed: Confirmation added: Revenue growth at or above the lower end of removed: mid-teens New Category revenue added: 3% to 5%, EPS growth added: near the middle of 5% to 8%, and leverage removed: inside added: on track for 2.0 to 2.5 times removed: by year end passes; added: pass; a guidance cut or a leverage miss fails. Feb 11, 2027: Full-year 2026 results: removed: Velo profit added: New Category margin and debt target. Pending. Watch: added: A New Category removed: profit growth that offsets added: contribution margin above the removed: 2.5% cigarette volume decline added: 13.3% of the first half of 2026 and leverage inside removed: the 2.0 to 2.5 times removed: range pass; leverage above 2.5 times or removed: weaker Velo margins added: a lower New Category margin fail. Q2 2027 (estimate): EU removed: nicotine pouch added: tobacco product and removed: excise rules. added: pouch tax proposals. Pending. Watch: EU removed: rules added: proposals that allow Velo with added: flavor limits removed: on flavors and moderate taxes pass; a added: proposed ban or very high pouch excise in large EU markets fails.
- Recent events
- Sep 29, 2026: At its capital markets day in Winston-Salem, BAT set Horizon 2030 targets. New Category revenue should grow at a mid-teens rate through 2030. New Category contribution margin should reach at least 30% by 2030. Sep 29, 2026: BAT removed: said added: repeated that it expects 2026 revenue and profit growth towards the lower end of its 3% to 5% and 4% to 6% removed: ranges. It expects added: ranges, and EPS growth towards the middle of its 5% to 8% range. removed: BAT shares fell added: It narrowed the expected currency headwind on added: EPS to about 2% to 2.5%. The ADS closed at $54.85, down from $56.05 the removed: day. added: day before. Sep 1, 2026: Dragos Constantinescu started as BAT's new Chief Financial Officer and Executive Director. He replaced Javed Iqbal, who had served as interim CFO. added: Aug 6, 2026: BAT named Celina Li, from Ocean Spray, as its next Regional Director for Asia-Pacific, Middle East and Africa from January 1, 2027. The current director for that region, Pascale Meulemeester, will replace Luciano Comin as Chief Marketing Officer when he retires at the end of February 2027. Aug 4, 2026: B.A.T Capital Corporation sold $750 million of 5.300% notes due 2033 and $750 million of 5.550% notes due 2036. The parent company guarantees the notes. Jul 30, 2026: BAT reported half-year 2026 revenue of £12,235 million, up 2.9% at constant currency. New Category revenue grew removed: 18.0%, and adjusted added: 18.0% at constant currency. Adjusted profit from operations removed: grew added: was £5,426 million, up 2.5% added: at constant currency. BAT raised its forecast for the 2026 decline in global cigarette industry volume to removed: £5,426 million. added: about 3%. Feb removed: 11, added: 12, 2026: BAT posted full-year 2025 revenue of £25,610 million. The company raised its dividend 2.0% to 245.04 pence per share, and removed: committed to added: confirmed a £1.3 billion share buyback for 2026. May 28, 2025: BAT sold added: 313 million ITC Limited shares, about 2.5% of removed: its stake in ITC Limited added: ITC's share capital, for removed: roughly $1.5 billion, cutting its holding from 25.44% to 22.94%, with added: net proceeds removed: directed toward added: of about £1.05 billion. BAT kept about 23% of ITC. It used the money to reduce debt removed: reduction and removed: a higher added: to add £200 million to its 2025 share buyback.