British American Tobacco (BAT) has confirmed it remains on course to meet its current guidance after enjoying a jump in vape sales during H2.

The tobacco giant revealed in a trading update that it had an estimated 40% vaping market share across key markets, including the UK and US, with its Vuse products.

However, BAT did also warn of a 2% fall in volumes across global tobacco industry year-on-year, as a result of a shift away from traditional cigarette smoking.

BAT has anticipated that its sales of Vype, Glo, and Vuse could still see a 9% increase in sales to £3.6bn in the current financial year. The company’s full-year results for 2024 are due to be published in February.

“We are on track to deliver our 2024 guidance, demonstrating the strength and resilience of our business,” BAT chief executive, Tadeu Marroco, said.

“Our second-half performance acceleration is driven by the phasing of new categories innovation, the benefits of investment in US commercial actions and the unwind of wholesaler inventory movements.

“We are making good progress and while there is still more to do, I believe that the choices we have made and the actions we are taking through this investment year are the right way forward for BAT.”

Marroco also said that BAT would continue to reward its shareholders through “strong cash returns”, including through dividends and share buyback.

He added that the tobacco giant would commit to returning to a mid-term guidance of 3-5% revenue and mid-single digit adjusted profit from operations growth on an organic constant currency basis by 2026.

Investment analyst at AJ Bell, Dan Coatsworth, commented that even though global tobacco industry sales are slowly declining, this is only by a small amount and that “next-generation products such as vaping are filling the gap”.

“Growth rates for next generation products haven’t been as strong as some companies would have liked, yet the transition from old to new continues to make progress,” Coatsworth added.

“Expectations have been readjusted and more investors are warming to the sector again, as evidenced by BAT’s shares enjoying a good run this year following a miserable period on the stock market.”

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