Story
British American Tobacco Shares Fall After Trimming 2026 Growth Forecast
Summary
British American Tobacco announced it expects 2026 revenue and profit growth to be at the lower end of its previous guidance, citing foreign exchange headwinds and prompting a drop in its share price.
Shares of British American Tobacco (LON:BATS) fell 1.7% on Tuesday after the global tobacco giant announced it expects to deliver results toward the lower end of its full-year growth guidance for 2026.
Growth Forecast Trimmed
In an update provided during its Capital Markets Day in North Carolina, BAT said it remains on track to deliver, but now anticipates results at the lower end of its previously stated ranges. The company also noted a significant currency impact.
The revised expectations for fiscal 2026, at constant currency rates, are as follows:
- Revenue Growth: Towards the lower end of the 3-5% range.
- Adjusted Profit from Operations Growth: Towards the lower end of the 4-6% range.
- Adjusted Diluted EPS Growth: Towards the middle of the 5-8% range.
Compounding the revised outlook, BAT said that based on current spot rates, it projects a translational foreign exchange headwind of approximately 2-2.5% on its 2026 adjusted diluted earnings per share growth.
Strategic Focus on New Categories
AdLooking further ahead, CEO Tadeu Marroco and the management team detailed the company's "Horizon 2030" ambitions. The strategy centers on growing its New Category revenue, which includes vaping and heated tobacco products, by mid-teens through 2030.
BAT is also targeting a contribution margin from these New Categories of at least 30% by 2030. The company stated this would be achieved through a focus on premium products, improving the sales mix, increasing scale, and more targeted resource allocation.
Financial Health and Market Impact
Despite the trimmed forecast, the company reaffirmed its commitment to financial stability and shareholder returns. BAT expects to be within its target leverage range of 2.0-2.5x by the end of the year.
The company also stated it would continue to reward shareholders through cash returns. The guidance revision nonetheless weighed on investor sentiment, leading to the decline in the company's stock price during Tuesday's trading session.
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