Smokeless Gains Fail to Mask Cigarette Seismic Shift as BAT Shares Wobble
03.06.2026 - 17:15:50 | boerse-global.de
British American Tobacco’s pivot away from combustible tobacco is gathering pace, yet the market remains fixated on what it is leaving behind. Shares in the London-listed giant slipped as much as 4% on Tuesday after the company cautioned that the global decline in cigarette volumes is accelerating faster than previously expected — a reminder that even double-digit growth in new categories cannot instantly offset an eroding core.
The stock closed Tuesday at 4,450 GBX in London, down 2.51% on the day after touching an intraday low of 3,894 GBX. In euros, the shares traded around 51.10 EUR, shedding 1.31% on the session and taking the week-to-date loss to 7.33%. Despite the setback, the longer-term picture remains positive: the shares have gained 6.13% since the start of the year and about 26% over the past twelve months.
BAT upgraded its growth outlook for the "New Categories" — vaping, heated tobacco and modern oral products — to a mid-teens percentage increase for both the first half and full year of 2026. That is a step up from the previous expectation of low double-digit expansion. The upgrade was powered by two star performers: Velo nicotine pouches and Vuse vapes. In the United States, Velo Plus captured an additional 10.4 percentage points of market share, while Vuse added 1.3 percentage points to its global value share.
The progress is critical because the old core business is shrinking more quickly. BAT now forecasts a 2.5% contraction in worldwide cigarette volumes for 2026, up from an earlier estimate of 2.0%. Competitive pressure has intensified in Asia-Pacific and the Middle East, and while the U.S. combustible market has held relatively steady, the structural headwinds are unmistakable.
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Last fiscal year, traditional cigarettes generated £20.2 billion of revenue for BAT, compared with just £3.6 billion from the new categories — roughly 18% of total group sales. That ratio underscores why the transformation story remains a work in progress. The company confirmed its 2026 targets: organic revenue growth of 3% to 5%, adjusted operating profit up 4% to 6%, and adjusted diluted EPS growth of 5% to 8%. However, management indicated that a larger portion of earnings will fall in the second half, raising the stakes for the months ahead.
On the capital allocation front, BAT reiterated its £1.3 billion share buyback programme for 2026 and expects cash conversion above 95%. The net debt-to-adjusted-EBITDA ratio is on track to reach the 2.0x-to-2.5x target by year-end. The progressive dividend policy remains intact, offering a yield of 5.38% on a price-to-earnings multiple of roughly 12.9.
Analyst sentiment remains broadly constructive. Bank of America reiterated a buy rating on June 3, and the consensus of ten analysts is also buy, with an average price target of 50.45 GBP — implying potential upside of nearly 13%.
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A leadership change is also on the horizon: Dragos Constantinescu will take over as chief financial officer from interim CFO Javed Iqbal on September 1. CEO Tadeu Marroco has said that cost savings from the "Fit2Win" efficiency programme will contribute more strongly in the second half, helping to accelerate profit delivery.
For now, the market is pricing in the tension between a promising smokeless ramp and a still-dominant cigarette franchise that is losing volume faster than anticipated. The half-year results, due in the coming weeks, will be the next real test of whether BAT can convince investors that the new growth engine has enough torque to pull the whole vehicle forward.
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