British American Tobacco (BATS.L): Thoughts ahead of H1 26 results

Research evidence excerpt

British American Tobacco (BATS.L): Thoughts ahead of H1 26 results

Goldman Sachs British American Tobacco (BATS.L)

US nicotine category; what the latest data is telling us

Our analysis of the latest trends in the US nicotine market - building on MSAI and Nielsen

datasets, as well as the GS Proprietary Nicotine nuggets survey - highlights several key

points. (1) Despite improving trends for total US cigarette category, we believe most of

that improvement has been driven by the discount / deep discount segment; given

pressures on consumer from rising gas prices we expect downtrading pressure to

continue. (2) BAT’s performance in nicotine pouches has remained strong YTD, with

Nielsen trends running well ahead of Visible Alpha consensus; we expect the category to

remain dynamic through H2 26, as a step-up in innovation and upweighted investment

levels potentially shift competitive currents, and we view BAT as well-placed. (3) Trends

for Vuse have improved YTD, looking ahead we see a more constructive outlook

underpinned by signs of better illicit enforcement and potential for flavoured vapour

products.

Exhibit 6: The US is BAT’s largest and most profitable Exhibit 7: Cigarettes still account for more than three

region - it accounts for almost 60% of group EBIT quarters of BAT’s US revenue

BAT revenue and EBIT by region (FY26e) BAT US revenue (FY26e)

100% Traditonal Oral /

other

28% Modern Oral

80% 37%

15% Vapour

60%

18%

40%

57%

20% 45%

0%

Revenue EBIT Cigarettes

Americas and Europe Asia Pacific and Middle East and Africa United States

Source: Company data, Goldman Sachs Global Investment Research Source: Company data, Goldman Sachs Global Investment Research

COMBUSTIBLE VOLUME DECLINES MODERATING THROUGH H1 26; BUT

DOWNTRADING TRENDS ACCELERATING