Key Points:
- 2026 Growth Dependent on Enforcement Dynamics
- Modern Oral Establishes Structural Leadership
- Vapour Recovery Linked to Illicit Market Removal
- Cigarette Decline Reinterpreted Through “Poly-Usage”
- Capital Discipline Reinforces Transition Strategy
2Firsts, February 12, 2026
British American Tobacco held its FY2025 results call on the morning of February 12, 2026 (GMT), framing the year ahead as a return to its mid-term growth algorithm while acknowledging that delivery will depend heavily on regulatory enforcement and illicit market dynamics.
Management confirmed that 2026 is expected to mark a return to its 3–5% revenue, 4–6% profit and 5–8% EPS growth model. However, executives guided to the lower end of the range and said performance would be “second-half weighted,” reflecting ongoing uncertainty in several markets.
The company also announced a planned £1.3 billion share buyback for 2026 and reiterated its deleveraging targets, alongside an upgraded Fit2Win cost-efficiency goal of £600 million in annual savings by 2028.
U.S. Enforcement and the “Level Playing Field”
A recurring theme during the Q&A was the impact of illicit disposable vapour products on BAT’s Vuse business in the United States.
Responding to a question from Jefferies regarding regulatory delays and market dynamics, CEO Tadeu Marroco said:
“What we want to see in the US is a level playing field because in a level playing field, we know that we can win.”
The remark was made in the context of enforcement against unauthorized disposable e-cigarettes, which management said have distorted competitive conditions.
Marroco also noted a recent complaint filed with the U.S. International Trade Commission (ITC), where an administrative law judge recommended issuing a General Exclusion Order on imported illicit vapor products. The full Commission’s Final Determination is expected in March 2026, with the Presidential Review period scheduled to conclude in the second quarter.
Management said it expects the substantive impact of any ruling to manifest later in 2026 and continues to assume a stable U.S. vapour trajectory for the year, reflecting cautious expectations around the pace of enforcement implementation.
Modern Oral Positioned as Structural Growth Driver
In contrast, executives were more assertive when discussing oral nicotine. Marroco said:
“Velo is the fastest-growing brand in the fastest-growing new nicotine category globally… I am delighted to announce that at the end of the year, we reached global volume share leadership in Modern Oral.”
Management also referenced recent U.S. regulatory signals, noting:
“The FDA has recently recognized the positive role that nicotine pouches can play in helping adult smokers transition.”
BAT positioned Modern Oral as its strongest-performing smokeless segment, with region-specific product adaptations supporting U.S. expansion.
Cigarette Decline and the “Poly-Usage” Shift
Addressing Citi’s question on accelerating U.S. cigarette volume declines, Marroco acknowledged that natural decline rates have moved from a historical 4–5% range to around 7–8%.
“We have moved from a historical 4% to 5% range of natural decline to something more in the region of 7% to 8%… we see a growing level of poly-usage.”
He said consumers are increasingly reducing daily cigarette consumption while supplementing with alternative nicotine formats. BAT said it is budgeting 2026 assuming continued 7–8% U.S. combustible decline.
The company added that U.S. revenue and profit returned to growth in 2025 for the first time since 2022, describing it as evidence that its “U.S. reset” strategy is gaining traction.
Australia Cited as Illicit Trade Case Study
Discussing Australia, Marroco criticized what he described as regulatory imbalance:
“With this illogical regulation they are now incentivizing consumers to smoke a product that is much cheaper than the legal markets… Today, 85% of nicotine consumption in Australia is illegal.”
The figure was cited by management to illustrate the scale of illicit trade in that market. Executives argued that enforcement and regulatory design will be critical variables for long-term industry stability.
Product and Technology Updates
BAT also outlined upgrades across its new category portfolio. In vapour, Vuse Ultra introduces connected features via the MYVUSE app, including device lock and usage tracking, alongside a removable battery designed to align with evolving regulatory standards.
In heated tobacco, the company is repositioning its glo range through premium devices such as glo HiLo, featuring a two-piece format and new heating technologies, while reducing maintenance requirements.
In oral nicotine, BAT highlighted Velo Shift for international markets and reiterated that Velo Plus was tailored to U.S. consumer preferences, with a higher-moisture Velo Max planned for launch in 2026.
Overall, the call signaled controlled stabilization rather than acceleration. Modern Oral provides momentum, vapour recovery depends on enforcement, combustibles continue to decline but generate cash, and capital discipline is rising in priority.
Whether 2026 becomes a genuine inflection year will likely hinge more on regulatory execution than on product cadence.
Further analysis to follow from 2Firsts.
（Cover image: BAT Chief Executive Tadeu Marroco speaks during the FY2025 preliminary results webcast on February 12, 2026. ｜Source: BAT 2025 Preliminary Results webcast screenshot）
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