SENS-AI
BTI Results Bullish

BRITISH AMERICAN TOBACCO PLC - Preliminary results for the year ended 31 December 2025

British American Tobacco p.l.c.
Full analysis

What this filing means

Bull case

  • Announced enhanced shareholder returns including a 2.0% dividend increase to 245.04p and a new £1.3 billion share buy-back program for 2026.
  • Strong momentum in New Categories with smokeless brand consumers reaching 34.1 million and category contribution increasing by 77.1%.
  • Positive U.S. performance in combustibles and rapid profitability of Velo Plus, which reached the number 2 market position within a year.
  • Reiteration of mid-term financial algorithm with revenue growth targets of 3-5% and adjusted EPS growth of 5-8%.

Bear case

  • Significant deterioration in cash metrics, with net cash from operating activities down 37.4% and free cash flow plunging 48.8%.
  • Reported profit growth of 265% is heavily distorted by a one-off Canadian settlement provision; adjusted profit growth was a more modest 2.3%.
  • Management guidance for 2026 is cautious, projecting performance at the lower end of the target growth ranges.
  • Leverage increased slightly to 2.48x adjusted net debt/EBITDA, while cash conversion efficiency dropped by 307 basis points to 63%.
View original SENS announcement

AI-generated summary by SENS-AI, based on the original JSE SENS filing.

SENS-AI conclusion

British American Tobacco (BTI) delivered a complex set of FY2025 results characterized by strong progress in its 'New Categories' transition but marred by a significant temporary decline in cash flow metrics. While the headline profit growth is inflated by legal settlement accounting, the commitment to a £1.3 billion share buy-back and a dividend hike provides a clear floor for the share price. The stock's current technical strength, trading above major moving averages, suggests the market is prioritising the shareholder return story over the accounting-heavy cash flow headwinds. Investor Takeaway: BTI remains a robust yield play with a growing smokeless business, but the 2026 guidance at the lower end of the range suggests a 'hold' for value rather than a 'buy' for aggressive growth.

Evidence from the filing

  • Increased shareholder returns via dividend growth and buy-backs

    “Dividend growth of 2.0% to 245.04p and a £1.3 billion share buy-back in 2026”

  • Growth in Smokeless brand consumers

    “Added 4.7 million consumers (to 34.1 million) of our Smokeless brands”

  • Confidence in mid-term growth algorithm

    “Confident in sustainably delivering mid-term growth algorithm, 2026 performance expected at the lower end of the range”

  • Decline in net cash from operating activities

    “Net cashgeneratedfrom operatingactivities (£m) £6,342m -37.4% Free cash (before payment of dividend) (£m) £4,048m -48.8%”

  • Profit increase due to Canadian settlement provision

    “Reported profit from operations up 265% (with reported operating margin up 28.4 ppts to 39.0%), largely due to the movement in the Canadian settlement provision”

  • Lower-end guidance for 2026

    “2026 performance expected at the lower end of the range”

  • Increase in leverage ratio

    “Adjusted net debt to adjusted EBITDA ratio 2.48x +0.05x”
Category
Results
Published
Feb 12, 2026

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