British American Tobacco Q2 2025 Earnings Call Highlights: Smokeless Revenue Hits 18.2% of Total

British American Tobacco reported Q2 2025 results with group revenue slightly ahead of expectations. Smokeless products now account for 18.2% of group revenue, up 70 base points YoY. The company added 1.4 million smokeless consumers, reaching 30.5 million, mainly driven by its vaping products. CEO Tadeu Marroco highlighted the positive transformation momentum and the company's confidence in its pathway ahead.

British American Tobacco (BAT) reported its Q2 2025 results, showcasing a mixed performance with group revenue slightly ahead of expectations. The company's revenue for the period stood at UK£12.1 billion, a 2.2% decrease from the first half of 2024 [1]. Despite this, the net income remained flat at UK£4.49 billion, and the profit margin improved to 37% from 36% in the previous year [1]. Notably, earnings per share (EPS) increased to UK£2.05 from UK£2.01, surpassing analyst estimates by 24% [1].

One of the standout figures from the report was the significant growth in smokeless products, which now account for 18.2% of group revenue, up 70 base points year-over-year (YoY) [1]. This growth was driven by a 1.4 million increase in smokeless consumers, bringing the total to 30.5 million, primarily due to the company's vaping products [1]. CEO Tadeu Marroco emphasized the positive transformation momentum and expressed confidence in BAT's pathway ahead [1].

The company's shares have seen a 5.9% increase from a week ago, reflecting investor sentiment towards the company's performance [1]. However, it is essential to consider the risk analysis, with three warning signs identified for BAT, which should be part of the investment process [1].

Institutional investors have shown increased interest in BAT, with Federated Hermes Inc. boosting its stake by 5.6% in the first quarter [2]. Other large investors, such as Park Avenue Securities LLC, Applied Capital LLC FL, Elevation Point Wealth Partners LLC, Keystone Financial Group, and Financial Management Professionals Inc., also increased their holdings in BAT [2]. Analysts have set new price targets, with a consensus rating of "Moderate Buy" and an average target price of $33.00 [2].

BAT recently announced a dividend of $0.7391 per share, to be paid on August 6th, with a dividend yield of 599.0% and a payout ratio of 60.78% [2]. The company's market cap stands at $112.11 billion, with a PE ratio of 11.16, a price-to-earnings-growth ratio of 5.03, and a beta of 0.38 [2].

Looking ahead, revenue is forecast to grow at an average of 2.2% per annum over the next three years, compared to a 2.5% growth forecast for the global tobacco industry [1]. Despite the mixed performance, BAT's focus on smokeless products and positive transformation momentum suggests a promising future.

References:
[1] https://finance.yahoo.com/news/british-american-tobacco-first-half-071827158.html
[2] https://www.marketbeat.com/instant-alerts/filing-federated-hermes-inc-raises-holdings-in-british-american-tobacco-plc-nysebti-2025-08-03/