British American Tobacco (LSE:BATS) reported first-half 2026 results that were broadly in line with expectations, with smokeless products accounting for 19.8% of total group revenue. Revenue from the company’s New Categories portfolio increased 18% at constant exchange rates, helping lift overall revenue by 2.9% on the same basis. Strong performance in the U.S. and the Americas, Middle East and Europe (AME) region helped offset a slower recovery across Asia-Pacific, the Middle East and Africa (APMEA).
Adjusted operating profit rose 3.5% during the period, while adjusted diluted earnings per share increased 7.9%. Reported profit and earnings were lower than the previous year, primarily due to the impact of Canadian legal settlement charges recorded in the prior period rather than underlying trading performance.
Smokeless Strategy Continues to Gain Momentum
BAT reaffirmed its full-year 2026 guidance, although it expects results to come in at the lower end of its medium-term growth targets. Management continues to forecast New Categories revenue growth in the mid-teens and highlighted ongoing progress in reducing debt, maintaining strong cash conversion and returning capital to shareholders.
The company also confirmed plans to complete a £1.3 billion share buyback programme, reflecting confidence in its financial position and long-term strategy.
Modern Oral Products Lead Expansion
BAT said it continues to strengthen its position in the global modern oral nicotine market, with market share gains supported by products such as Velo Plus in the United States. Double-digit growth across both the AME and APMEA regions also contributed to the expansion of its smokeless portfolio.
Within the traditional combustible business, higher pricing and product mix improvements continued to support revenue, while targeted investments in key markets are helping finance the company’s transition toward reduced-risk nicotine products.
Management also welcomed recent regulatory developments in the U.S. relating to vapour and modern oral products, which it believes provide a favorable environment for the planned nationwide rollout of Velo Max and selected Vuse flavours.
Investment Outlook
BAT continues to benefit from solid underlying profitability, healthy cash generation and a clear strategy to expand its smokeless product portfolio. The company’s attractive dividend yield, moderate valuation and ongoing share buyback programme remain key strengths. However, investors continue to monitor leverage levels, softer cash flow compared with the previous year, pressure within the vapour category, illicit trade and uneven regional market performance, which could affect near-term growth.
About British American Tobacco
British American Tobacco (LSE:BATS) is one of the world’s largest tobacco and nicotine companies, with a portfolio spanning traditional combustible products and a growing range of reduced-risk alternatives. Its New Categories business includes modern oral nicotine products, vapour devices and heated tobacco products, supporting the group’s long-term transition toward a multi-category business model.
The company is focused on expanding smokeless products across major international markets while maintaining the profitability of its combustible brands. Through its Reynolds business in the United States and continued investment in products such as Velo and Vuse, BAT aims to strengthen its leadership in next-generation nicotine products while generating sustainable returns for shareholders.
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