Executive Summary

On 13 February 2025, British American Tobacco released full-year results for FY24.
 
1.    Total revenue declined 6.4% to £25.9 billion, due to regulatory issues in Bangladesh and Australia, as well as larger than expected decline in cigarette volumes in the US. DEPS was up 2% to 2400.24p/share.
2. Combustibles revenue remained flat, with price increases of 5.3% offsetting volume declines of 5.2%.
3.    Profit from operations came in £2.7 billion, impacted by a once off £6.2 billion charge related to provisioning for the settlement in Canada.
4.    NGPs increased by £251 million and now have a contribution margin of 7.1%.
5.    Adjusted net debt/EBITDA now sits at 2.44x, below the target of 2.54x.
6.    A mixed bag of category performance with vapour disappointing at -5%, but Modern Oral growing at 46%, ahead of expectations.
7.    Guidance remained unchanged at 1% revenue growth and share buybacks continue. Management guided for £700 million in FY24 (now completed) and a further £900 million in FY25. (Subsequently, a further £200 million in share buybacks has been announced taking the total to £1.1 billion).

Analyst thesis