British American Tobacco (BAT), the company behind Pall Mall and Lucky Strike, has reported a return to growth in its American business, fuelled by smokeless products.
In a recent trading update, BAT anticipates a resurgence in growth for its combustible products – cigarettes and cigars – in the first half of the year, as reported by City AM.
Meanwhile, its nicotine pouches, Velo Plus, are projected to witness triple-digit revenue growth in the US.
The firm has managed to secure a larger slice of the US tobacco market share, driven by Natural American Spirit and Lucky Strike.
Despite an anticipated 2% dip in global tobacco industry volumes, BAT has revised its expected full-year revenue growth from 1% to between 1% and 2%.
The company also forecasts new product revenue growth in the low-single digits in the first half of the year, accelerating to mid-single digits for the full year.
However, the robust performance of Velo Plus has been somewhat offset by the impact of “illicit vapour products” in the US and Canada. BAT noted that US legal industry volume is down mid-teens year-to-date.
Tadeu Marroco, Chief Executive, expressed optimism about the company’s progress, stating: “While there is more to do, I am encouraged by the progress we are making through our Quality Growth focus, and prioritising investment to the largest profit pools.”
He added: “I am confident that the investments we have made and the actions we are taking will drive a return to our mid-term algorithm in 2026.
“I am pleased with our progress in increasing financial flexibility driven by continued strong operating cash conversion and the completion of a partial monetisation of our stake in ITC.”
Just last week, BAT acknowledged it was assessing the possible divestment of its shareholding in ITC, a manufacturer of tobacco goods, in line with its strategic pivot towards non-combustible products.
