British American Tobacco (BAT) has performed in line with guidance in its financial year 2024, which it described as an 'investment year'.
The tobacco giant witnessed acceleration in the second half driven by various factors, including, among others, the phasing of innovation in its New Categories segment and the benefits of investment in commercial activities in the US.
BAT reported a 5.2% decline in revenue in FY 2024, driven by the sale of its businesses in Russia and Belarus in September 2023 and translational FX headwinds.
However, organic revenue was up 1.3% (at constant rates), driven by the performance of New Categories unit (up 8.9%).
Organic revenue in the Combustibles segment increased by 0.1% (at constant rates), as organic price/mix growth of 5.3% was offset by a 5.2% decline in volume.
Tadeu Marroco, chief executive of BAT added, "We continued our transformation this year, adding 3.6 million adult consumers (to a total of 29.1 million) of our Smokeless products, which now account for 17.5% of group revenue, an increase of 1.0 ppts vs FY23."
Annual Highlights
Reported profit from operations amounted to £2.7 billion from a loss of £15.8 billion in 2023.
Adjusted organic profit from operations increased 1.4% (at constant rates) year on year, driven by the performance in the AME and APMEA regions.
Contribution from New Categories increased by £251 million on an adjusted organic, constant FX basis, with category contribution margin now at 7.1%, reflecting an increase of 7.1 ppts in 2023.
The company plans to implement a share buyback programme worth £900 million in 2025.
Outlook 2025
BAT cautioned that global tobacco industry volume is expected to be down approximately 2% in 2025.
The company expects revenue growth of around 1% at constant rates in the new financial year as it navigates increased excise and VAT in Bangladesh and new tobacco regulations in Australia.
Marroco added, "In 2025, [...] I am confident that we will progressively build on our delivery as we shift from investment to deployment and we remain committed to returning to our mid-term guidance of 3-5% revenue and 4-6% adjusted profit from operations growth on a constant currency in 2026."
