British American Tobacco (BAT) has seen its revenue fall by 5.2% to £25.8bn in 2024, following the sales of its businesses in Russia and Belarus.

Despite the drop in total revenue, BAT’s revenue from new categories, which includes vapes, heated and oral products, increased by 2.5% to £3.43bn.

However, it added that the "growing presence of illicit single-use vapour products" has hampered its efforts to sell more of its own vapes across the year.

The firm stated that the new categories business is its "main driver of group growth", after making improvements over the last four years. It added that it will "continue to invest" in this transformation and "focus on the right opportunities in key growth areas".

Chief executive at BAT, Tadeu Marroco, said: "[Last year] was an investment year with delivery in line with our guidance. We continued our transformation this year, adding 3.6 million adult consumers to a total of 29.1 million of our smokeless products, which now account for 17.5% of group revenue, an increase of 1.0 ppts vs FY23.

"Our performance has accelerated in the second half, driven by the phasing of new categories innovation and the benefits of investment in US commercial actions, together with the unwind of related wholesaler inventory movements.

"Our focus on quality growth delivered better returns on more targeted investments across all three new categories, and our prioritisation and focus is already transforming our business performance in Europe. We made further progress on increasing profitability across new categories, and I am particularly pleased with our performance in modern oral."

In its 2025 outlook, BAT expects around 1% revenue growth, with its global tobacco industry volume is expected to drop by around 2%.

It also expects its profit from operations growth to increase by between 1.5% and 2.5%, including an expected 1.5% transaction FX headwind.

Furthermore, it reiterated its commitment to dividend growth in "sterling terms", alongside a £900m share buyback scheme.

In conclusion, investment director at AJ Bell, Russ Mould, said: "In 2024, areas like vaping and e-cigarettes contributed £250m out of its near £12bn worth of adjusted operating profit. This clearly illustrates the size of the task over the next decade better than the company’s observation that these areas of the business are now contributing some 17.5% of revenue.

"At a headline level the company posted a profit for 2024 but a big write down in Canada meant this was still a messy set of numbers.

"The company has a big job on its hands to restore its existing business to a decent level of performance, never mind achieving a complete transformation of the company. For now, CEO Marroco is likely to be judged on getting the basics right rather than anything more ambitious."

---