British American Tobacco (BAT) maintained its financial outlook for fiscal year 2026, targeting adjusted diluted earnings per share (EPS) growth toward the middle of its five percent to eight percent range. This projection is calculated on an adjusted-for-Canada basis, reflecting specific operational adjustments.
The company anticipates revenue and adjusted operating profit growth for FY26 at the lower end of their respective guidance ranges. Revenue is projected to increase between three percent and five percent, while adjusted operating profit is expected to grow between four percent and six percent, both at constant currency rates.
Management indicated adjusted operating profit growth will be strongly weighted toward the second half of FY26. The reaffirmation of EPS guidance is supported by anticipated lower net finance costs and ongoing share buybacks.
A translational foreign exchange headwind of two percent to 2.5 percent is expected to impact FY26 adjusted diluted EPS growth. This calculation is based on a USD/GBP spot rate of 1.3245.
BAT also confirmed its target to achieve leverage within its 2.0x to 2.5x adjusted net debt-to-adjusted EBITDA corridor by year-end. The company reported operating cash flow conversion of 80 percent in the first half, remaining on track for greater than 95 percent for the full fiscal year.
The Horizon 2030 outlook, which focuses on New Category products, calls for mid-teens revenue growth through 2030. This represents an acceleration from prior low-double-digit expectations for this segment, showing increased confidence in the growth drivers.
Further, the Horizon 2030 strategy targets a contribution margin of at least 30 percent for New Category products by the end of the decade. This indicates a clear path to profitability expansion within its non-combustible portfolio.
BAT continues its commitment to cash returns for shareholders, aligning with its leverage targets and operational performance. The company's de-leveraging efforts support this strategy, moving toward the specified adjusted net debt-to-adjusted EBITDA corridor.
