BAT lifts annual sales target as US demand improves

(Reuters) -British American Tobacco nudged up its annual sales growth target on Tuesday to 1%-2%, saying revenue in the first half was ahead of expectations and sales in the United States were picking up.

The maker of Lucky Strike and Dunhill cigarettes, which had previously forecast 1% sales growth this year, said it expects low-single digit revenue growth in the first half in its New Categories business that includes vapes, tobacco heating products and oral nicotine pouches.

BAT and its peers have been struggling with declining tobacco sales as consumers switch to cheaper brands or alternatives such as vapes, and as regulations tighten.

"While Combustibles industry volume remains under pressure... we have stabilised our total industry volume and value share," CEO Tadeu Marroco said in a trading statement.

The industry is also being squeezed by sales of unauthorised, flavoured disposable vapes. Sales of such products amounted to around $2.4 billion in the United States in 2024.

"The Vapour category remains impacted by the proliferation of illicit vapour products in the U.S. and Canada," Marroco said, adding that the first-half revenue growth forecast in New Categories reflected this pressure.

New Categories sales growth for the year is expected to accelerate to mid-single digits, the company said.

The United States accounted for 44% of BAT's total group revenue in 2024.

In February, BAT had warned of a 6.2-billion-pound ($8.39 billion) hit from a Canadian lawsuit and said tax headwinds in Bangladesh and Australia would dent its performance in 2025.

The company, which last month sold a $1.5 billion stake in Indian consumer goods company ITC, also increased its 2025 share repurchase target to 1.1 billion pounds.

($1 = 0.7391 pounds)

(Reporting by Shashwat Awasthi in Bengaluru; Editing by Rashmi Aich and Susan Fenton)