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Building a Smokeless World

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Combined Performance and Sustainability Summary 2024
2024 Overview
2024 Overview
Quality Growth
Dynamic Business
Sustainable Future
A montage of BAT products against a blurred and colourful background.

Building a Smokeless World

Combined Performance and Sustainability Summary 2024

Tadeu wearing a suit and smiling for the camera

Chief Executive’s Review

We set a compelling ambition to be a predominantly Smokeless business by 2035, driven by our refined strategy, and this is already paying dividends.

Read the full review
Tadeu wearing a suit and smiling for the camera

Chief
Executive's
Review

Combined Performance and Sustainability Summary 2024

Dear Stakeholders,

When I was appointed Chief Executive in May 2023, I set out to do two things: bring focus and discipline to the execution of our strategy, and deliver profitable transformation.

Despite a challenging external environment, I believe 2024 was a pivotal year in BAT's transformation with a real focus on investment for future growth.

We set a compelling ambition to be a predominantly Smokeless business by 2035, driven by our refined strategy, and this is already paying dividends.

Our global footprint and multi-category product portfolio have enabled us to continue to deliver resilient performance and value for shareholders - even during uncertain times. This, combined with our inclusive and delivery-focused culture, means we can achieve results today while pursuing future opportunities, reinforcing our commitment to enhance shareholder returns.

The foundations we have in place are strong. Looking ahead, strategic delivery and deployment are where we will focus our efforts to create A Better Tomorrow™.

Full-Year 2024 Performance

Despite a challenging environment, the resilience of BAT was reflected in our 2024 performance. Our focus on investment throughout the year is evident, with delivery in line with our guidance. Total Group revenue declined by 5.2%, largely due to the negative impact of the sale of our businesses in Russia and Belarus, partway through 2023 (and which, in turn, had an impact on 2024) and a translational currency headwind.

We continued to perform well in both AME and APMEA, growing total revenue (excluding Russia and Belarus and foreign exchange). I am pleased with the acceleration of our performance in the second half of the year, driven by the phasing of New Categories innovation and the benefits of investment in U.S. commercial actions, together with the unwind of related wholesaler inventory movements.

In the U.S., I am encouraged that our investment approach is strengthening our business, despite a challenging macroeconomic backdrop and the continued prevalence of illicit single-use nicotine products. Through our commercial actions, we are confident we can further improve our performance through sharper execution and by opening up untapped growth opportunities, particularly related to Modern Oral.

Our New Categories delivered another strong performance, after achieving profitability (at a category contribution level) two years ahead of plan last year. In 2024, New Category contribution was £249 million, with category contribution reaching 7.1 ppts. Revenue from our Smokeless products accounted for 17.5% of Group revenue.

2024 also saw further progress towards an agreement regarding the ongoing litigation in Canada. I am pleased that there appears to be a pathway to an agreement of all parties which we believe will enable the Group to continue to transform in this important market.

While the headwinds in our operating environment remain, I am assured by the strength demonstrated by the business. However, the prospect of ongoing volatility gives us even more impetus for sharper strategic focus and delivery.

A Refined Strategy

I believe we have the right strategy to drive us forward to greater success. 2024 was an investment year, paving the way towards our ambition. The direction of travel is clear and execution and cultural transformation are where we are focusing.
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One of my highlights of 2024 was leading our Capital Markets Day in Southampton, where my Management Board showcased the progress made against priority areas for the business. From achieving profitability of our New Categories business two years ahead of schedule to improving our financial flexibility and strong cash generation, it is evident that our strategy is working.
‍

Another highlight for me this year was the launch of Omni™, a dedicated resource created by BAT specifically for scientists, public health authorities, regulators, policy makers and investors. It articulates our progress towards A Smokeless World, and demonstrates how science, innovation and over a decade's worth of evidence can combine to achieve it.
‍
None of this would be possible without the 48,000+ talented people who work at BAT, who are guided by BAT’s core values every day.

The truly inclusive culture we are building will ensure we have the talent to deliver both now and in the future. Further details on our new people strategy and culture transformation can be found on pages 28–29 of our Combined  Performance and Sustainability Summary.
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Our refined strategy is now embedded across the business, and it is fundamentally built upon three pillars: Quality Growth, Sustainable Future and Dynamic Business. Together they form a roadmap which we believe will enable BAT to continue to grow and transform sustainably, responsibly and successfully.

Quality Growth

As the driving force behind our transformation, our Quality Growth pillar is about how we innovate, transition into the future, and deliver great products in a sustainable way for consumers.
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With a more balanced focus on top-line and bottom-line delivery, we are already seeing results in AME and APMEA. Meanwhile our investments in the U.S. have put us on a stable footing which will enable us to replicate that success. Despite recent challenges, the U.S. remains the most profitable tobacco and nicotine market in the world and I believe it will be the cornerstone of our future growth.

We will maximise our growth potential by focusing on brands, efficiency and margin delivery across our business. At the same time, we will continue to build and maintain our competitive edge, while progressing our Beyond Nicotine portfolio and investments with an eye to medium- and long-term growth.

Effective regulation, both in the U.S. and the rest of the world, will be pivotal to ensure a level playing field and to allow consumers to switch to Smokeless alternatives if they choose. Our long track record of managing regulatory change gives us confidence that we will be able to navigate these issues.

Sustainable Future

The Sustainable Future pillar is crucial to achieving our goal of creating A Better Tomorrow™ by Building a Smokeless World.

It emphasises our investment in the quality of our smokeless products - driven by science, and our commitment to further external engagement and advocacy, including with regulators, to make our purpose a reality.

Sustainability and integrity remain a priority in everything we do as we work to provide more adult consumers around the world with access to Smokeless products responsibly.

Dynamic Business

Building further on BAT’s success, the Dynamic Business pillar reflects our commitment to ensuring the business operates efficiently and effectively across all areas.

This will be achieved by creating financial flexibility to invest in our people, our products and to maximise shareholder returns.

Our new Chief Financial Officer, Soraya Benchikh, and I will be working closely together to build on our financial foundation. We will also continue our disciplined approach, with a focus on capital allocation and debt management. With a leverage ratio of 2.44x, inside our narrowed leverage target range of 2.0-2.5x adjusted net debt to adjusted EBITDA, we have increasing flexibility to deliver sustainable value, while remaining agile to respond to macroeconomic and regulatory developments.

As part of our active capital allocation, in March we announced a £1.6 billion share buy-back programme, consisting of £700 million in 2024 and £900 million in 2025. This, in addition to maintaining a growing dividend, reflects our commitment to enhancing shareholder returns.

Ensuring that BAT is a diverse, inclusive and people-oriented place to work is another core part of the Dynamic Business pillar. I am truly proud of the culture we have built, and the thousands of people across the globe who are bringing BAT's ambitions to life.

Looking Ahead with Confidence

What is clear to me is that our refined strategy is right and the foundations we’re building upon are firm.

We are transparent about our intention to move our business beyond cigarettes by migrating adult smokers from cigarettes to Smokeless products.

What we won't do is shy away from the challenges that may come as a result. An example of this in 2024 was the launch of our new industry-leading ambitions for our Vapour devices and liquids, supported by evidence-based solutions, to tackle some of the most pressing societal concerns. We are actively engaging with stakeholders, and investing heavily in our science, innovation and resource to enable us to execute with precision and achieve high quality, long-term growth – with sustainability and integrity throughout.

Our transformation journey is well underway, and we are an organisation ready to deliver, with operational excellence and improving capital allocation flexibility for the benefit of all stakeholders.

The future is bright for BAT. I am excited about the difference we can make, and the potential we have to Build a Smokeless World and drive A Better Tomorrow™.

Tadeu Marroco
Chief Executive

Notes:

1. Please refer to page 395 of the Annual Report and Form 20-F 2024 for the Non-GAAP measures definitions.
* 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.
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Chair’s Introduction

Our corporate purpose is being lived by thousands of colleagues globally. At the same time, our refined strategy is enabling us to navigate transformation with focus, enhanced execution and resilience.

Read the full review
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Chair's
Introduction

Combined Performance and Sustainability Summary 2024

In 2024 we saw yet another year of significant challenges across the globe, with continued economic and political volatility.

The impact of these issues was further exacerbated by high interest rates and inflation, alongside persistent cost-of-living pressures. As a result, major economies have witnessed changes in consumer confidence and buying behaviours.

Across our industry we have seen a rapid evolution of markets, like the U.S., for example, where cigarette volumes have declined at pace as adult consumers seek out both value-for-money combustible products and smokeless alternatives.

However, I believe that when changes and challenges arise, so do opportunities to grow, overcome and even thrive.

Transforming with Purpose

As a Board we have a responsibility to ensure that the Group delivers for stakeholders. In 2020, we began the journey of our A Better Tomorrow™ purpose. Four years on and our corporate purpose is being lived by thousands of colleagues globally. At the same time, our refined strategy is enabling us to navigate transformation with focus, enhanced execution and resilience.

2024 was a year for BAT to build, invest, innovate and refine for a sustainable future, and it is crucial that shareholders have a clear view of the path ahead.

We have invested in bolstering our U.S. business, and in new product development and launches across our categories, while thoughtfully extracting value from our combustibles franchise. All of this has been done through the lens of having a better understanding of adult consumers and our evolving industry.

It has never been more important to maintain both momentum and strategic focus, and I’m confident we will continue to do just that.

Driving sustainable change

Our Combined Annual and Sustainability Report gives a full view of BAT’s business strategy and performance. It also outlines our progress towards our purpose of 'A Better Tomorrow™ and reaffirms our commitment to Building a Smokeless World.

This is the third year that we have embedded our sustainability data into our Annual Report. It is also the first year that we have refined some of our focus areas from a sustainability perspective, demonstrating our ongoing efforts to create a meaningful impact. You can read more about our refined sustainability strategy on page 36 of our Combined Performance and Sustainability Summary 2024.

Ultimately our goals have not changed. If anything, we are more acutely focused on how we reach them. Meaning how we migrate adult cigarette consumers actively, sustainably and responsibly to reduced risk*† Smokeless alternatives, and importantly, how we measure success. In doing so, BAT will be well positioned to deliver for investors, consumers and wider stakeholders, while employees can benefit from a purpose-driven business that they can feel excited about.

Our Values and Culture

A happy and engaged workforce moving in tandem typically leads to better performance, productivity and a sense of pride. It is here that our six corporate Values and cultural transformation play an important role, as they contribute to BAT's success and strategic delivery. The key is to bring everyone along on the journey, so expectations and behaviours are clear, along with what needs to be achieved.

To be an exciting and winning company means being a place where our people are passionate about what they do and the difference they make. It is also about understanding and being invested in BAT's success.

Market Dynamics

With over one billion adult smokers in the world, there are many jurisdictions which, with the right regulatory approach, could see smoking rates decline faster through greater acceptance of Smokeless products.
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We know that Tobacco Harm Reduction - encouraging smokers who would otherwise continue to smoke to switch completely to less risky alternatives – is the fastest route to achieving a Smokeless World. This is why we’re actively working with various stakeholders to make this a reality. The growth of adult smokers seeking smokeless alternatives is a long-term, sectoral trend.

In many countries, the challenges presented by illicit trade continue to persist across the industry. This is a problem for both combustibles and New Category products, intensified by increasing costs in regions across the world. We believe more appropriate regulation and enforcement is needed to tackle these issues, and we welcome signs of increasing action.

Building a Smokeless World

Our aim to reduce the health impact of our business remains prominent, and one of the ways in which we are demonstrating our resolve on these issues is through our science.

We took a step forward in October by publishing a series of new industry-leading ambitions for our Vapour devices, supported by evidence-based solutions. 'BAT's commitment to Responsible Vaping Products' is a comprehensive resource which sets out how we intend to tackle some of the most pressing societal concerns.
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We believe that growth within the Smokeless category will be driven by sustained investment in our brands and targeted innovation to respond to the evolving tastes of adult consumers. With our multi-category portfolio, BAT is well placed to capitalise on this adult consumer shift to Smokeless products while continuing to manage the combustible cigarette business responsibly. Together with active portfolio management, we recognise that investing in our brands is fundamental to sustaining BAT's performance for the future.

Dividends and Share Buy-backs

Reflecting the confidence in our business and its future prospects, the Board has declared a dividend of 240.24p per ordinary share, payable in four equal instalments of 60.06p per ordinary share, to shareholders registered on the UK main register or the South Africa branch register and to American Depository Shares (ADS) holders, each on the applicable record dates.

The dividends receivable by ADS holders in US dollars will be calculated based on the exchange rate on the applicable payment dates.

Further information on dividends can be found on pages 54 and 449 of the Annual Report and Form 20-F 2024.
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As part of our active capital allocation, in March we launched a programme to buy back BAT ordinary shares worth £1.6 billion using proceeds from a partial share disposal of the Group’s shareholding in ITC Limited (ITC). The first tranche of the programme saw the buy-back of BAT ordinary shares for a total amount of £700 million in 2024, with the remaining £900 million due to complete in 2025.

We continue to carefully review our capital allocation to provide value for shareholders and support the growth of BAT.

Board Changes

I was very pleased to welcome Soraya Benchikh to our Board this year.

Soraya joins the Board as Chief Financial Officer and Director, and she possesses extensive financial and leadership experience.

I would like to congratulate Soraya on her appointment, and I look forward to her contribution. With the breadth of experience and skills that we have on the Board, I am confident that our focus on accelerating our strategy will yield results.

Additionally, Uta Kemmerich-Keil will join the Board with effect from 17 February 2025. With her general management background in regulated industries and her experience in consumer, digital and strategic transformation, she makes a strong addition to our Board. Murray Kessler will step down from the Board with effect from 17 February 2025 and I would like to thank him for his contributions and wish him well in his new endeavours.

Summary and Outlook

It is encouraging that the outlook for the year ahead – according to some economists – is one of cautious optimism.

While it's fair to say that there are still some clouds on the horizon from a geopolitical and economic standpoint, our business has demonstrated time and time again that it is resilient. The diverse nature of our organisation, products, people and geographies are our strengths.

Building a sustainable future isn't always linear, and that was the priority for BAT in 2024. Looking ahead to the next few years, our efforts will be focused on delivery and innovation across the markets we serve globally.

Through continued investment in our brands and prioritising adult consumers and their preferences, the Board believes we are well placed to maximise opportunities in tobacco and nicotine as consumer preferences evolve. These markets remain attractive, and we are confident we have the right strategy in place, an exciting and winning culture, and the right people to deliver. Progress in these dimensions has bolstered our ability to execute consistently and sustainably. Tadeu discusses this in more detail on page 9 of our Combined Performance and Sustainability Summary.

BAT's Board and leadership team remain focused and confident in the Group's ability to deliver long-term, sustainable growth and value, while delivering A Better Tomorrow™.

Luc Jobin
Chair

Notes

* 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.
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Chief Financial Officer's Overview:

We are committed to delivering sustainable shareholder returns by driving quality New Category growth and extracting value from Combustibles, together with maximising cash generation to fund our progressive dividend and sustainable share buy-back.

Read the full review
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Chief
Financial
Officer's
Overview

Combined Performance and Sustainability Summary 2024

Our strategy is expected to deliver shareholder value creation as:

  • — Combustibles fuel our transformation
  • — Targeted capital deployment focuses on return on investment

I am honoured and delighted to be the Chief Financial Officer of BAT.
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I am confident that we are in a strong position to deliver on our ambitions, and I share the passion and conviction to Build a Smokeless World.
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Our strategy is designed to maximise shareholder sustainable returns.

Our key financial focus areas are:

  • fuelling our transformation as we maximise value from combustibles, using our scale and efficiencies to release cash;
  • deploying capital in a disciplined and targeted manner. This means investing wisely in the largest profit pools whilst maintaining a laser focus on return on investment;
  • strengthening our financial position by reducing debt, providing us with greater financial resilience; and
  • a balanced capital allocation approach – prioritising our transformation while delivering a progressive dividend, maintaining a sustainable share buy-back programme and exploring bolt-on acquisitions.

We believe we will achieve our priorities through an algorithm built around five key drivers.

Our five key drivers are:

  1. Quality revenue growth.
  2. Increase our adjusted gross profit.
  3. Accelerate New Category contribution.
  4. Sustainable growth in Adjusted Profit from Operations.
  5. Deliver in excess of £50 billion of free cash flow by 2030.

2024 financial performance summary

Our financial results have been impacted by a number of events that impacted the current and comparator period.

In 2024, revenue was down 5.2% to £25,867 million (having declined 1.3% in 2023 to £27,283 million). This was partly due to the timing of the sale of our Russia and Belarus businesses in September 2023, negatively impacting the comparative revenue and profit from operations by £479 million and £193 million, respectively.

Profit from operations was £2,736 million, against a loss of £15,751 million in 2023.

2023 was also negatively impacted by the impairment charges (£27.3 billion) largely associated with our U.S. combustibles business. 2024 included a total charge of £6.2 billion in respect of the anticipated settlement of Canadian litigation (see page 328 of the Annual Report and Form 20-F 32024), the first year of amortisation charges of the U.S. combustibles brands (£1.4 billion), a charge of £646 million in respect of Camel Snus, a charge of £449 million in respect of an excise assessment in Romania and £149 million of fixed asset impairments related to the Group’s London head office and the intention to seek an orderly exit from Cuba.

In 2024, translational foreign exchange was a headwind on both revenue (by 4.7%) and profit from operations (by 4.4%).

Excluding these items, on a constant currency basis, which we believe reflects the operational performance of the Group:
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– Revenue was up 1.3% driven by the continued growth of New Categories, which grew revenue by 8.9%; and
– Adjusted profit from operations was up 1.4%, as New Categories further grew profitability (at the category contribution level) building on the momentum shown in 2023 as those products became profitable two years earlier than originally planned.

On a reported basis, basic EPS was 136.7p compared to -646.6p in 2023, which was a decline of 320.5%. Diluted EPS was 136.0p in 2024, while in 2023 it was -646.6p, or down 321.5%. This was mainly due to the impacts to profit from operations described earlier, offset by a one-off gain of £1.4 billion, recognised as the Group monetised a portion of the investment in its Indian associate ITC and a credit of £0.6 billion related to debt refinancing undertaken in 2024.

Excluding the adjusting items and the effect of translational foreign exchange, adjusted diluted earnings per share, at constant rates, increased by 1.7% to 381.9p, building on the 4.0% growth in 2023.

We remain highly cash generative. This allows us to balance investment in the future while rewarding shareholders with a further increase in dividends (up 2.0% to 240.24p), while targeting our narrowed leverage range of 2.0-2.5x adjusted net debt to adjusted EBITDA - reaching 2.44x in 2024. However, excluding the provision recognised in respect of cash and cash equivalents and investments held at fair value, and adjusted EBITDA earned, in Canada, this would have been 2.75x.

Delivering our financial algorithm

Quality revenue growth

We aim to maximise the value from combustibles while driving growth in our New Categories through innovation and premiumisation.

Excluding the impact of currency:

– Combustibles pricing remained a driver of value, with Group price/mix of 5.3% in 2024 (compared to 7.5% in 2023). However, our combustibles revenue was down 1.6% (2023: down 0.8%), driven by lower combustibles volume (down 9.0% in 2024) largely due to the difficult trading in the U.S. where volume was 10.1% lower. Both years were also impacted by the timing of the sale of our businesses in Russia and Belarus, excluding which would have seen a marginal growth of 0.1% in 2024 and growth of 0.6% in 2023.

– New Categories revenue was up 6.1% in 2024 and 17.8% in 2023, with growth (excluding the impact of Russia and Belarus) driven by all three regions as the increases in Modern Oral and HP more than offset a decline in Vapour.

Increase our adjusted gross profit

We aim to continually increase our adjusted gross profit#, as defined on page 399 of the Annual Report and Form 20-F 2024. Adjusted gross profit is a new measure, introduced in 2024, with comparative movements to 2023 only.

Total adjusted gross profit#, on a constant currency basis, grew by £396 million, an increase of 2.2% in 2024.

Adjusted gross profit from our combustibles portfolio, through pricing and efficiencies, has remained resilient, up 0.3% in 2024.

The main driver of growth has been New Categories, which has improved in each of the last four years. This continued in 2024 with an increase of 19.8% in adjusted gross profit, driven by volume growth, revenue growth management programmes and cost optimisation.

Accelerate New Category contribution

We will continue to invest in our transformation. We will focus on the right opportunities in the key growth areas - evaluating opportunities to maximise returns, freeing up resources for growth and incremental profit.

In 2023, this resulted in our New Categories being profitable (on a contribution basis), two years ahead of our original plan.

In 2024, we have further increased New Category contribution by £251 million (at constant rates), with New Category contribution margin at 7.1% up from 0.0% in 2023 (excluding the impact of the businesses sold in Russia and Belarus).

Sustainable growth in Adjusted Profit from Operations

Adjusted profit from operations#, on a constant currency basis, was up 1.4% in 2024, having grown 3.1% in 2023.

This is supported by our strict management of overhead expenses. We are committed to disciplined cost management and to continue to explore opportunities to optimise our footprint.

In 2024, our cost optimisation programmes delivered savings of £402 million. This largely offset the impact of inflation of 6.5% (or £387 million), mainly due to higher leaf prices (impacted by adverse weather conditions) and manufacturing costs (labour and utilities) and which we expect to continue into 2025 due to the timing and utilisation of leaf inventory. We have committed to deliver cost savings of over £1.2 billion in the three years to 2025 (with over 70% delivered to date) and an additional £2 billion from 2026 to 2030.

Deliver in excess of £50 billion of free cash flow (2024-2030)

Our operating cash conversion, as defined on page 409 of the Annual Report and Form 20-F 2024,, has been ahead of our 90% target for a number of years. In 2024, we again delivered ahead of expectations at 101%.

The Group remains highly cash generative. Excluding material payments in areas such as the Canadian litigation settlement, repayments in respect of FII GLO (refer to page 289 of the Annual Report and Form 20F 2024), we expect to generate over £8 billion of average annual free cash flow before dividends, growing at least in line with adjusted profit from operations.

In 2024, the Group generated £10.1 billion (2023: £10.7 billion) of net cash generated from operating activities. This translates to £7.9 billion (2023: £8.4 billion) of free cash flow before dividends.

Since 2020, we have returned £27.5 billion to shareholders, including a £700 million share buy-back programme in 2024, with a further £900 million committed for 2025.

Yet our leverage ratio (being adjusted net debt to adjusted EBITDA) has continued to improve towards our narrowed target range, decreasing from 2.57 times to 2.44 times.

Our liquidity profile remains strong, with average debt maturity close to 9.5 years and maximum debt maturities in any one calendar year of around £4 billion. We continue to target a solid investment-grade credit rating of Baa1, BBB+ and BBB+, with a current rating of Baa1 (stable outlook), BBB+ (stable outlook), BBB+ (stable outlook) from Moody's, S&P and Fitch@, respectively.

Facing the Future with Increasing Confidence

Our business is well placed for the future.

Our track record of delivering robust financial performance and consistent cash generation demonstrates how we navigate the near-term macro-economic uncertainties and challenges, underpinned by geographic diversity and a portfolio of international brands.

Soraya Benchikh
Chief Financial Officer

Notes:

* On an organic, constant rate basis.
** Category contribution: Profit from operations before the impact of adjusting items and translational foreign exchange, having allocated costs that are directly attributable to New Categories.
*** On an adjusted, organic, constant rate basis.
^^ Net cash generated from operating activities before the impact of trading loans provided to a third party and after dividends paid to non-controlling interests, net interest paid and net capital expenditure.
§ Adjusted gross profit as defined on page 399 of the Annual Report and Form 20-F 2024.
# Excluding the sale of Russia and Belarus.
@ A credit rating is not a recommendation to buy, sell or hold securities. A credit rating may be subject to withdrawal or revision at any time. Each rating should be evaluated separately of any other rating.
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Our year in numbers

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Our performance metrics
Consumer
Volume
Financial
Number of Smokeless Product Consumers1
0m
Hover over chart to reveal
2023,2022
false
25.5,22.3
#00B1EB, #0E2B63
20
25.5
0
false
m
true
24
700
#0e2b63
Cigarette and HP volume share growth (bps)
10 bps
2023: -10 bps
2022: -10 bps
Cigarette and HP value share growth (bps)
-30 bps
2023: -50 bps
2022: flat
Vapour (mn units)
0
-6%
Hover over chart to reveal
2023,2022
false
654,612
#00B1EB, #0E2B63
100
654
0
false
true
24
700
#0e2b63
HP (bn sticks)
21
2023: 24
2022: 24
Cigarettes (bn sticks)
505
2023: 555
2022: 605
Profit/(loss) from Operations (£m)
0
n/m
Hover over chart to reveal
2023,2022
false
-15751,10523
#00B1EB, #0E2B63
1000
10523
-15571
false
m
£
true
24
700
#0e2b63
Revenue (£m)
25,867
2023: 27,283
2022: 27,655
Revenue from New Categories (£m)
3,432
2023: 3,347
2022: 2,894

A refined purpose

The best choice any adult smoker can make will always be quitting combustible tobacco products completely.

For the last few years, our aim has been to build A Better Tomorrow™. This has meant working to reduce the health impact of our business by offering adult consumers a greater choice of enjoyable and reduced-risk† products compared to cigarettes. Now is the time to take a step forward.

BAT’s New Category products are not smoking cessation devices and are not marketed for that purpose.

* 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 US, 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.

A Better Tomorrow™ means Building a Smokeless World. A smokeless world built on Smokeless products where, ultimately, cigarettes have become a thing of the past.
A world where smokers have migrated from cigarettes to smokeless alternatives.
A world where Tobacco Harm Reduction is both understood and accepted. A world where smokers make a switch to better.

Introducing Omni™

Forward Thinking For A Smokeless World
Review the evidence.
Join the conversation.

Omni™ is an evidence-based manifesto for change, which captures BAT’s commitment and progress towards Building a Smokeless World to create A Better Tomorrow™.

It makes a compelling case, offering insights into our scientific and real-world evidence of Tobacco Harm Reduction (THR) in action, supported by hundreds of independent scientific studies, our own research into innovations, and real-world examples.

Our ambition is for Omni™ to be a platform for a necessary societal conversation founded in evidence, a manifesto for change and a mandate for action.

Kingsley Wheaton
Chief Corporate Officer

Tobacco Harm Reduction presents a significant public health opportunity.

It is our hope that Omni™ will spur a dialogue with stakeholders – scientists, public health authorities, regulators, policy makers, and investors – and across the wider scientific and regulatory ecosystem related to tobacco and nicotine products.

Learn more at https://asmokelessworld.com/

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Our Strategic Navigator

A Better Tomorrow logo
A triangle diagram showing the BAT strategy

Quality Growth

Transitioning to a more balanced focus on top-line and bottom-line delivery, focusing on our brands and innovation, and continuing to seek long-term opportunities Beyond Nicotine.

Sustainable Future

Seeking to actively migrate consumers away from cigarettes and to smokeless alternatives sustainably, responsibly and with integrity.

Dynamic Business

Building a future-fit, data-driven organisation and ensuring we are efficient and effective in all of our operations. This will create the greatest financial flexibility possible to invest in our people, our products and provide returns to our investors.

Our Multi-Category Portfolio

BAT is a consumer-focused business operating internationally. Our multi-category approach means we are well placed to provide adult consumers with products designed for every mood and moment. Our portfolio reflects our commitment to meeting the evolving and varied preferences of today’s adult consumers.

Strategic portfolio (Smokeless)
Vapour

Vapour products contain an e-liquid, nicotine and flavours, and a battery-powered heating element. When activated, via puff or button, the heating element heats the liquid and forms an aerosol, commonly known as vapour.

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63
markets where our Vapour products are currently available
Global Drive Brands
Heated Products

Heated Products (HPs) have two main functional parts: a battery-powered device and a consumable - which contains a plant-based (tobacco leaf or non-tobacco leaf) substance that is heated. Once the consumable has reached the necessary temperature, it forms an aerosol releasing nicotine and flavours.

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33
markets where our Heated Products are currently available
Global Drive Brands
Modern Oral

Modern Oral products are pouches which contain high purity nicotine, water, and other high-quality ingredients. Consumers place the disposable pouch within the mouth, between the lip and gum. Nicotine and flavours are then released and absorbed through the inner lining of the mouth.

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44
markets where our Modern Oral products are currently available
Global Drive Brands
Traditional Oral

Traditional Oral products include snus and snuff. Snus is a moist form of oral tobacco originating from Sweden. It is available in loose form or as pouches.

With Traditional Oral products, consumers take a single portion or pouch and place it within the mouth, between the lip and gum. The nicotine and flavours are then absorbed through the inner lining of the cheek.

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3
markets  where our Traditional Oral products are currently available
Global Drive Brands
Strategic portfolio (Combustibles)
Combustibles

The Group sold 505 billion cigarette sticks and 13 billion other tobacco products (stick equivalents) in 2024. With 37 fully integrated cigarette manufacturing facilities in 35 markets, the Group operates internationally.

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Global Drive Brands
Combustibles logos
U.S. -specific
Combustibles logos

Our Global Business

Our regional profile maximises opportunities for quality growth in our sector. Each of our markets is accountable for its own performance and driving growth.

Our business is divided into three complementary regions, with a balanced presence in both high-growth emerging markets and highly profitable developed markets.

Our in-depth marketplace analysis delivers insights on consumer trends and segmentation, which facilitates our geographic brand prioritisation across our regions and markets.

Consumer preferences and technology are evolving rapidly, and we are staying ahead of the curve with our digital hubs and innovation centres. We are also leveraging the expertise of our external partners and are looking forward to exciting results from our venturing initiative, Btomorrow Ventures.

Three Complementary Regions

Map is accurate as at 31 December 2024 and is representative of general geographic regions and does not suggest that the Group operates in each country of every region.

Select a region to learn more

U.S.
United States

Regional revenue

£XX,XXXm
Top markets:

The U.S. is a top market for Cigarettes, Vapour, Modern Oral and Traditional Oral products

Combustibles, Traditional Oral, New Categories, Other
9094,1058,1078,48
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m
£
Revenue by category
£
XX
m
Combustibles
£
XX
m
New Categories
£
XX
m
Traditional Oral
£
XX
m
Other

2024 has been a year of stabilisation as we build stronger foundations. We believe we have the right capabilities and that our investment approach is strengthening our business to create opportunities for further growth.

David Waterfield

President and CEO (Reynolds American Inc.)

-30bps

Cigarette value share change

18.9%

Smokeless revenue as % of total revenue
AME
Americas and Europe

Regional revenue

£XX,XXXm
Top markets:

Cigarettes: Brazil, Germany, Mexico, Romania
HP: Germany, Greece, Hungary, Italy, Poland, Romania, the Czech Republic
Vapour: Canada, France, Germany, Poland, Spain, the UK
Modern Oral: Denmark, Norway, Poland, Sweden, Switzerland, the UK

Combustibles, Traditional Oral, New Categories, Other
7039,34,1730,438
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m
£
Revenue by category
£
XX
m
Combustibles
£
XX
m
New Categories
£
XX
m
Traditional Oral
£
XX
m
Other

With nearly 20% of total revenue now delivered by our Smokeless products, we are demonstrating the Group's ability to turn aspiration into sustainable economic reality. We have overcome a number of challenges in 2024 and 2023, but have a strong portfolio to continue to drive value into 2025 and beyond.

Fred Monteiro

Regional Director

flat

Cigarette value share change

19.1%

Smokeless revenue as % of total revenue

Fred wearing a suit smiling for the camera
Associates
and Joint Ventures

Key markets: India

£XX,XXXm
Top Markets: India

‍

‍
APMEA
Asia-Pacific, Middle East and Africa

Regional revenue

£XX,XXXm
Top markets:

Cigarettes: Bangladesh, Japan, Pakistan
HP: Japan, South Korea

Combustibles, New Categories, Other
4552,624,172
#EF7D00,#00B1EB,#A3A3A3
false
m
£
Revenue by category
£
XX
m
Combustibles
£
XX
m
New Categories
–
Traditional Oral
£
XX
m
Other

I am extremely proud of our performance in 2024, a year where we have delivered revenue growth, excluding FX, across all products while also driving an increase in profit and margin.

Michael (Mihovil) Dijanosic

Regional Director

flat

Cigarette value share change

11.7%

Smokeless revenue as % of total revenue

Michael wearing a suit smiling for the camera
A map of the world split out into regions and coloured using the BAT brand colour palette.

Revenue by Region

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U.S., AME, APMEA
11278,9241,5348
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m
£
£0m
Total revenue

Revenue by Product Category

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New Categories,Traditional Oral,Combustibles,Other
3432,1092,20685,658
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m
£
£0m
Total revenue
0
major product categories
0
employee nationalities
0
regions
0+
employees

Our Business Model

As a global thought-leading business, it’s crucial for us to understand our adult consumers’ preferences, so we can develop products they love and distribute them around the world. Listening to feedback from stakeholders also enables us to refine our strategy, deliver sustainable value and build A Better Tomorrow™.

Our eight-step business model

Our business model begins and ends with the consumer. The insights we gather from adult consumers, backed by robust science, unlock value by ensuring we offer the right product choices to meet their preferences. Our product portfolio is constantly being enhanced through innovations designed to better serve adult consumers and build A Better Tomorrow™.

Following the responsible sourcing of raw materials and components, we utilise our global footprint to manufacture at speed and scale. We use our global distribution capabilities to ensure our products are where they need to be, when they are needed, based on our market archetype model. Through our responsible marketing practices and powerful portfolio, we market and sell our products which, in turn, generate further Insights.

a blue diagram of the BAT business model

A Better Tomorrow™ for:

Consumers
Society
Employees
Shareholders 
& Investors
1
Seeing over the horizon

We possess a deep understanding of consumers and their diverse preferences. This is aided by our rich heritage as one of the most established tobacco and nicotine businesses in the world, and our data and analytics-led approach.

These insights enable the development and responsible marketing of our products, so that they are fit to satisfy consumer preferences.

Powered by our consumer insights platform, we focus on product categories and consumer segments across our global business that have the greatest potential for sustainable growth.

Link to Principal Risks
Tobacco, New Categories and other regulation interrupts growth strategy; Inability to develop, commercialise and deliver the New Categories strategy; Climate change; Circular economy; Cyber security

2
Accelerating Tobacco Harm Reduction Acceptance

To substantiate the product safety, quality and reduced-risk potential of our New Category products we rely on world-class science. It is crucial for building trust with consumers and regulators, and encouraging adult smokers to completely switch to less risky alternatives*†1.

Chemistry, molecular biology, and toxicology are just some of the fields that our extensive scientific research programme covers. We are transparent about our science and have recently published a compendium of information in the Omni™, which explores over a decade’s worth of Tobacco Harm Reduction evidence, alongside science and research.

Link to Principal Risks
Competition from illicit trade; Tobacco, New Categories and other regulation interrupts growth strategy; Significant increases or structural changes in tobacco, nicotine and New Categories related taxes; Inability to develop, commercialise and deliver the New Categories strategy

3
Staying ahead of the curve

With consumer preferences and technology evolving at pace, we rely on our growing global network of digital hubs, innovation hubs, world-class R&D laboratories, external partnerships and our corporate venturing initiative, Btomorrow Ventures.

Innovation is central to us driving sustainable growth, and we invest significantly in research and development to create incredible products that satisfy consumer tastes. Led by data and consumer insights, each innovation takes us a step further towards building A Better Tomorrow™ by reducing the health impact of our business.

Link to Principal Risks
Inability to develop, commercialise and deliver the New Categories strategy; Climate change; Circular economy; Cyber security

4
Sourcing materials responsibly

Most of our tobacco is sourced by our Group-owned vertically integrated Leaf Operations through direct contracts with c.91,000 farmers. The remaining tobacco is sourced from third-party suppliers that, in turn, contract with an estimated 157,000 farmers. The vast majority of tobacco farms in our supply chain are smallholder family farms. Beyond tobacco, we source product materials like paper and filters for cigarettes and, for our New Category products, we have a growing supply chain in consumer electronics and e-liquids. We also have a vast network of suppliers of indirect goods and services that are unrelated to our products, such as for IT services and facilities management.

Link to Principal Risks
Geopolitical tensions; Supply chain disruption; Inability to develop, commercialise and deliver the New Categories strategy; Injury, illness or death in the workplace; Solvency and liquidity; Foreign exchange rate exposures; Climate change; Circular economy; Cyber security

5
Utilising our global manufacturing footprint

Our high-quality products are manufactured in our facilities across the globe. These products and the tobacco leaf we source are then optimised for distribution and sale.

Our New Category products are manufactured in a mix of our own and third-party factories. We work to keep our costs globally competitive and endeavour to use our resources as effectively as possible.

Link to Principal Risks
Geopolitical tensions; Supply chain disruption; Disputed taxes, interest and penalties; Injury, illness or death in the workplace; Solvency and liquidity; Foreign exchange rate exposures; Climate change; Circular economy

6
Moving our products seamlessly everywhere

Using modern technologies, including AI and machine learning, helps us to get our products to the right place at the right time.

Our products are sold around the world and distributed efficiently using distribution models tailored to suit local circumstances and conditions.

These distribution models include retailers, supplied through our direct distribution capability or exclusive distributors, and our Direct-to-Consumer business – which has been accelerated through the deployment of owned e-commerce sites.

Link to Principal Risks
Geopolitical tensions; Tobacco, New Categories and other regulation interrupts growth strategy; Supply chain disruption; Inability to develop, commercialise and deliver the New Categories strategy; Foreign exchange rate exposures; Climate change; Cyber security

7
Marketing our products responsibly

Using a globally responsible approach to marketing, we seek to help raise standards and prevent under-age access, while growing our market share by encouraging adult consumers to choose our products.

Our marketing across all our tobacco, nicotine and nicotine-free products and brands is governed by our Responsible Marketing Principles (RMP) and Responsible Marketing Code. They include strict requirements to be accurate, responsible, and targeted at adult consumers only. Our RMP are applied even when they are stricter than local laws.

Link to Principal Risks
Competition from illicit trade; Tobacco, New Categories and other regulation interrupts growth strategy; Inability to develop, commercialise and deliver the New Categories strategy; Litigation; Foreign exchange rate exposures

8
Offering the consumer choice

We are proud of our powerful portfolio of brands. This includes our combustibles portfolio and our Smokeless product brands which we believe will accelerate us towards our strategic aim. Our product pipeline is strong, aided by our quality insights, science and innovation, and being well-positioned globally. We offer adult consumers all over the world a range of high-quality products – from value-for-money to premium, including combustible products, Vapour, Modern Oral and Heated Products.

Link to Principal Risks
Competition from illicit trade; Geopolitical tensions; Tobacco, New Categories and other regulation interrupts growth strategy; Supply Chain disruption; Litigation; Significant increases or structural changes in tobacco, nicotine and New Categories related taxes; Inability to develop, commercialise and deliver the New Categories strategy; Disputed taxes, interest and penalties; Foreign exchange rate exposures; Circular economy

* 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.