British American Tobacco PLC (BATS.L): H1 26E results should be well received and guidance upgrades likely with Sept CMD. Still our top pick.

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British American Tobacco PLC (BATS.L): H1 26E results should be well received and guidance upgrades likely with Sept CMD. Still our top pick.

British American Tobacco PLC (BATS.L)

28 July 2026 Citi Research

….BUT are likely to be upgraded at the September CMD — We think the risk to FY

guidance is skewed to the upside, underpinned by: 1) the likelihood that Velo in the

US continues to beat sequentially slowing H2 consensus volumes growth

expectations (cons. H2 Velo volumes +74% vs. June exit rate +132%); 2) potential

further upside to US Vuse estimates as regulatory enforcement against illicit

continues to step-up; and 3) the H2 skew of Fit2Win cost efficiency benefits (esp.

the flow through of recent headcount reductions). As such, we see scope for BAT to

upgrade guidance metrics from the current lower end to the middle of the mid-term

algorithm. However, even if BAT confirm they are not seeing any material impact

from the Middle East conflict with the H1 result and despite US gasoline prices off

highs, the still elevated geopolitical uncertainty means management may defer a

formal guidance upgrade until its Sept-29th CMD.

What’s in detail?

Combustibles – US and APMEA volumes pressure offset by price and double duty

drawback: We expect BAT’s combustibles volumes to have been weak in H1 (-

6.8%), impacted by share losses in the US (US volumes -8% due to industry

softness and heightened competition in the deep-discount segment) and

weakness in APMEA (Bangladesh). We expect cigarette OSG in positive territory,

supported by robust pricing in most markets and double-duty drawback benefits

in the US. Across AME, performance should remain solid, led by Brazil and Turkey

while APMEA has lagged management’s initial expectations due the tough

environment in Bangladesh/Australia.