BAT’s Half-Year Update: Strong Smokeless Growth but Persistent Guidance and Regulatory Overhang
11.06.2026 - 06:37:17 | boerse-global.de
British American Tobacco turned in a half-year trading update on June 2 that on the surface confirmed its full-year targets and even raised the bar for its smokeless operation. Yet the initial market reaction — a drop of as much as 8.8% — suggested that many investors are still holding their breath.
The headline upgrade centred on the New Categories segment. BAT now expects revenue from smokeless products — led by the Vuse vapour brand and Velo modern oral pouches — to grow at a mid-teens percentage rate for both the first half and the full year of 2026. That marks a noticeable acceleration from the low double-digit growth flagged at the start of the year. Smokeless already accounts for 18.2% of group revenue, and the company added 4.7 million new users in the period, bringing its total adult consumer base for these products to 34.1 million. The long-term ambition remains unchanged: 50 million consumers by 2030 and smokeless contributing half of all revenue by 2035.
Despite the upgrade, the stock initially tanked before clawing back some ground to eventually trade around 2% higher at €52.92. The whipsaw reflects a familiar frustration: BAT reaffirmed its full-year guidance of 3% to 5% revenue growth and 5% to 8% adjusted earnings-per-share growth, but the market has noted that the company has for several quarters run its commentary towards the lower end of those ranges. What was once dismissed as conservative planning is starting to look like a persistent pattern. Technically, the shares sit above both their 50-day moving average of €51.62 and the 200-day average of €49.18, but at €52.92 they remain roughly 8% below the 52-week high of €57.50 reached in mid-May. The relative strength index of 51.2 is neutral, offering little directional conviction.
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Underlying the struggle is the accelerating decline of the traditional cigarette business. Global industry volumes are now forecast to fall 2.5% this year, a steeper drop than previously expected. Combustibles still make up the vast majority of BAT’s revenue and profit, so the structural drag is real. At the same time, the very category that is supposed to replace it — smokeless — faces a growing regulatory threat in Europe. The European Commission’s April 2026 evaluation report on the Tobacco Products Directive signalled an intention to restrict or even ban novel nicotine products. BAT has responded with a European campaign to mobilise consumers and trade partners, but lobbying offers no guarantee against legislative momentum. In the UK, the Tobacco and Vapes Act 2026 received Royal Assent in April, with new age restrictions on tobacco sales kicking in on 1 January 2027.
The company continues to reward shareholders nonetheless. It bought back and cancelled 620,369 of its own shares in the first week of June alone, and the 2026 buyback programme of £1.3 billion remains in place. Net debt is expected to fall to between 2.0 and 2.5 times adjusted EBITDA by year-end. The adjusted operating profit target — up to 6% growth — has also been confirmed, and the company plans to roll out new heated-tobacco innovations in the second half to drive further momentum.
In short, the smokeless story is accelerating and the capital returns are solid. But the combination of guidance that keeps pointing to the floor of its own range, a shrinking cigarette base, and mounting regulatory pressure in two of its key markets means the bull case is not yet out of the woods. Until the mid-teens growth in New Categories starts to translate into margin expansion, the stock is likely to trade sideways.
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British American Tobacco Stock: New Analysis - 11 June
Fresh British American Tobacco information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.
