British American Tobacco - Investing in BAT

Investing in BAT

We have strong foundations, and a strategy for quality growth. We are shaping the landscape to build a sustainable future.

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Transformation Driving Sustainable Growth >

Creating Sustainable Value for our stakeholders >

Dynamic Business Making Active Choices for the Future >

Continuing Our Track Record of Delivery >

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Transformation Driving Sustainable Growth

Delivering profitable growth and reducing harm.

Creating Sustainable Value for our Stakeholders

Reducing our Health and Sustainability impact

Dynamic Business Making Active Choices for the Future

Leveraging our established strengths and expertise

Continuing Our Track Record of Delivery

Commitment to deliver returns and cash to shareholders

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For BAT's historical financial results

Transformation Driving Sustainable Growth

Our New Category transformation is delivering profitable growth and reducing harm.

Our New Category transformation is delivering profitable growth and reducing harm

Our corporate purpose is to build A Better Tomorrow™, by reducing the health impact of our business by offering adult consumers a greater choice of enjoyable and less risky products compared to cigarettes. To accelerate our transformation journey, we are now committed to Building a Smokeless World. We will deploy our global multi category portfolio to actively encourage smokers to ‘Switch to Better’ nicotine products, and continue to seek long-term opportunities Beyond Nicotine in Wellbeing and Stimulation, realising the multi-stakeholder benefits of A Better Tomorrow™.

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Our commitment is demonstrated by our new ambition to become a predominantly smokeless business, with 50% of our revenue from non-combustibles by 2035. Revenue growth in the global nicotine industry is accelerating through the development of New Categories, which offer reduced-risk alternatives to combustible products.^*†

With only 10% of the world’s 1 billion smokers currently using New Category products, our well stablished global multi-category strategy provides the greatest opportunity for long-term growth, reduced harm and portfolio transformation.

We continue to make progress towards our targets to have 50 million consumers of our Smokeless Products by 2030, and to become a predominantly smokeless business by 2035.

Prioritising where and what products to focus on, via our market archetype model, will guide our resource allocation decisions. We are now profitable with our New Categories business, on a category contribution basis, and we expect to be increasingly profitable from 2024.

We strive to continue to profitably and responsibly manage our transition away from combustibles, driving funds to further invest in our transformation and deliver sustainable profit growth and cash flow over the long-term.

In order to achieve this, we have refined our Group strategy to ensure clear lines of sight across the entire organisation, and we have set ambitious targets to be met through the delivery of our three strategic pillars:

Quality Growth
Sustainable Future
Dynamic business

* Based on the weight of evidence and assuming a complete switch from cigarette smoking. These products are not risk free and are addictive.
† Our products as sold in the U.S., including Vuse, Velo, Grizzly, Kodiak and Camel Snus, are subject to FDA regulation and no reduced-risk claims will be made as to these products without agency clearance.

Creating Sustainable Value for our Stakeholders

Reducing our Health and Sustainability Impact

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This requires us to address all our key sustainability topics such as climate change, circular economy, biodiversity and human rights. We also recognise the need to collaborate across our supply chain and work with our partners as we advance key sustainability initiatives.

This approach will allow us to create a stronger BAT through:

Responsible Leadership in New Categories – we aim to set industry standards for the development, manufacturing and marketing of New Category products;
Create Positive Value in Agriculture – by leveraging our agricultural sourcing model we seek to deliver a positive impact in our agricultural supply chain, particularly with respect to social and environmental issues.
Deliver Net Zero GHG Emissions across our Value Chain – through working towards decarbonising our own operations, and collaborating with suppliers and other across our value chain;
Trusted Organisation Operating with Integrity – working to create and maintain a culture where our people are proud of the role they play in our transformation and aim to always operate to the highest standards.

This builds on our ratings and recognition which include:

Our Science Based Targets initiative (SBTi) approved commitment to a near-term 1.5°c emissions reduction trajectory, the most ambitious designation available;
An A rating in 2023 in the latest MSCI ESG Rating assessment (upgraded from BBB)^; and
Achieving A-, A- and A-, respectively in our 2023 CDP assessments for Climate Change, Water Security and Forests^.

By working to reduce the health and sustainability impact of our business we will drive growth and create shared value, delivering change as we work towards our objectives. Our commitments are rooted in targets against which we will track and share the progress as we our transform our business.

^A rating, whether by CDP or any other organisation, is not a recommendation to buy, sell or hold securities. A rating may be subject to withdrawal or revision at any time. Each rating should be evaluated separately from any other rating. In addition, the criteria used in ratings may differ among ESG rating organisations. Companies may also supply different information to such organisations (or none at all) and this lack of consistency may impact rankings.

^^ Our goals cover all tobacco we purchase for our products ('tobacco supply chain'), which are used in our combustibles, Traditional Oral and Tobacco Heated Products. Our metrics, however, derive data from our annual Thrive assessment, which includes our directly contracted farmers and those of our third-party suppliers, which represented over 94% of the tobacco purchased by volume in 2023 ('Thrive Supply Chain').

Dynamic Business Making Active Choices for the Future

Leveraging our established strengths and expertise

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In addition, leveraging the benefits of our world-class expertise in science and R&D, our manufacturing, distribution, marketing and brand building has enabled us to build three global brands, Vuse, glo and Velo, delivering over £3 billion of revenue in less than a decade.

Our long-standing experience operating within complex regulatory, legal and fiscal frameworks, provides BAT with a compelling competitive advantage to drive portfolio growth and transformation within the wider tobacco industry. With our new Corporate and Regulatory Affairs function we will drive more proactive, science led engagement with all stakeholders to further our ambition to Build a Smokeless World.

We will continue to increase investment in new capabilities, including enhancing our innovation pipeline, leading responsible New Category development and further leveraging our broad digital enablers. This gives us confidence that we can deliver on our ambitions.

Sustainable success will also be accelerated by a culture of inclusivity and collaboration. Our transformation is supported by senior talent recruitment from a diverse range of industries. Together with our new role of Chief People Officer, we are focused on developing a skills-enabled and performance driven organisation that is essential to driving forward our strategic agenda.

We continuously monitor and assess our capital allocation framework to unlock shareholder value through; investing in the right opportunities; optimising the return on our investments; and maximising our cash generation; to reduce our leverage, and generate sustainable cash returns for our shareholders.

* Excluding China

consumers of our non-combustible products

Continuing our track record of delivery

Commitment to delivering returns and cash to shareholders

Over the last 10 years, we have delivered 8% adjusted diluted EPS (at constant rates) and a 5% dividend CAGR and are confident in our medium-term targets of 3-5% revenue growth and mid-single digit adjusted profit from operations growth (organic basis at constant rates) by 2026.

The Group is highly cash generative. Over the last four years, we have delivered at least 100% operating cash conversion annually and returned, since 2019, a total of £26.2 billion to shareholders.

We remain committed to continuing our 25 year track record of consistent dividend growth, rewarding our shareholders through all economic cycles. Over the next 5 years, we are on track to generate around £40bn of free cash flow before dividends.

We have an active capital allocation framework to deliver long-term value for shareholders.

This includes:

continuing to grow the dividend;
reaching middle of our target leverage corridor of 2-3x adjusted net debt / adjusted EBITDA;
considering potential bolt-on M&A opportunities; and
share buybacks to enhance shareholder returns.

operating cash conversion targeted annually

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For BAT's historical financial results

For BAT's historical financial results.

Download the file below to analyse BAT's historical financial results on a half-yearly basis.

BAT historical data

Investing in BAT

Investing in BAT

Quick links

Transformation Driving Sustainable Growth

Creating Sustainable Value for our Stakeholders

Dynamic Business Making Active Choices for the Future

Continuing Our Track Record of Delivery

Data centre

Transformation Driving Sustainable Growth

Creating Sustainable Value for our Stakeholders

Dynamic Business Making Active Choices for the Future

Continuing our track record of delivery

Data centre

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