As at 4 May 2026

Executive Summary

Key highlights

In this report we review BTI’s preliminary FY25 results and assess the impact on our outlook:

Financial results at a glance:

• Group revenue rose 2.1% at constant currencies.

  • Revenue from the smokeless next-generation portfolio increased 7% at constant currencies, lifting the category’s revenue contribution by 70 basis points (bps) to 18.2%.

  • Revenue from combustibles was up 1% for the period at constant currencies.

  • The decade-long Canadian litigation case involving BTI, Philip Morris International and Japan Tobacco has been resolved, prompting Canadian adjustments that exclude proceeds from BTI’s Canadian subsidiary, as it is allocated to the C$32.5 billion settlement which is the total for the trio and not BTI alone.

• The US returned to growth, with revenue up 5.5%, supported by the performance of new category products.

  • Combustibles revenue grew by 4.6%, while new-category product revenue rose 19.8%.

  • Adjusted profit from operations showed a growth of 5.9%.

• Americas and Europe (AME) performance was stable during the period under review, with revenue up by 3.3%.

  • Combustibles revenue grew by 2.3%, with new category product revenue increasing by 4.3%.

  • Adjusted profit from operations increased by 9.6%.

• Asia-Pacific, Middle East and Africa (AMPEA) performance was impacted by regulatory headwinds in Bangladesh and Australia, with segment revenue decreasing by 7.2%.

  • Combustibles revenue fell by 8.3%, while new category product revenue decreased 7.6%.

  • Adjusted profit from operations declined 17.9%.

• Group profit from operations surged 265% over the period, driven primarily by a decrease in other operating expenses related to litigation reversals on the Canada settlement provisions. Excluding these provisions, profit from operations increased by 2.3%.

• Group operating profit margin grew by 28 bps to 39%. Adjusted for Canada, the margin remained flat at 44%.

• Diluted earnings per share increased by 157% but went up by 3.4% when adjusted for Canada; dividends per share rose 2%.

Analyst thesis

Our recommendation is based on:

• Brand equity positions British American Tobacco (BTI) as one of the leading players in the tobacco industry.

• The launch of next-generation smokeless products alleviates long-term concerns over cigarette volume declines.

• The US (~45% of revenue) illicit vape crackdown through stricter regulation, has assisted in the growth of new generation products and restored revenue growth in the region.

• The dividend yield continues to be an attractive characteristic for an already strong defensive rand-hedge within its sector.

• Valuation levels from a P:E basis are slightly above the long-term history.