British American Tobacco (BAT) has revealed it is on course to hit its full-year expectations after reporting a return to revenue and profit growth in its US market.

Across the entire group, the tobacco company is expecting to deliver full-year revenue growth of 1-2%, supporting 1.5 to 2.5% adjusted profit from operations growth.

BAT revealed in its last full-year results in February that despite a 5.2% drop in total revenue across the group to £25.8bn, its revenue from new categories, which includes vapes, heated and oral products, increased by 2.5% to £3.4bn.

In a pre-close trading update to the market today, BAT has reported an improvement in performance in its “combustibles” delivery, covering cigarettes and an “excellent” Velo Plus performance. The group also cited strong global growth from Velo in its modern oral business, BAT’s fastest growing new category segment.

BAT chief executive, Tadeu Marroco, commented: “In the US, I am very pleased that we expect to return to both revenue and profit growth in H1 and FY. While combustibles industry volume remains under pressure, we have stabilised our total industry volume and value share.

“Excluding the deep discount segment where we are not present, we are gaining share, driven by Natural American Spirit and Lucky Strike.”

Marroco said that BAT is now expecting “low-single digit” new category revenue growth in H1, accelerating to mid-single digit for the full-year.

“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. 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.”

Head of equity research at Quilter Cheviot, Chris Beckett, added that BAT had issued a “solid” trading update, giving it plenty cover when speaking with investors

“The good news is that the US is expected to return to revenue and profit growth in the first half of the year after three negative years,” Beckett commented “This has predominantly been driven by traditional cigarette performance and strong sales of Velo – its nicotine pouch brand. Illicit vapes has offset some of this growth with the vaping business declining consequently.”

Beckett added: “With the stock trading on nine times next year’s expected earnings it remains a good option for investors. Tobacco remains a very cheap, cash generative industry and if BAT can become more reliable then it will do well.”

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