Warning growth is slowing! British American Tobacco (BTI.US) predicts 2026 results under pressure, e-cigarette scuffle and regulation are doubly burdened
The Zhitong Finance App learned that British American Tobacco (BTI.US) announced the latest performance guidelines on Tuesday. It is expected that its 2026 results will be at the low end of the mid-term target due to regulatory pressure and fierce competition in the US e-cigarette market, offsetting strong growth in other areas of its business portfolio.
Affected by this news, British American Tobacco shares fell by about 4% during pre-market trading. However, the tobacco giant, which owns well-known cigarette brands such as Haocai and Dunhill, also stated that it is still expected to achieve the 2025 performance target and expand the share repurchase plan from £1.1 billion set in July to £1.3 billion (about US$1.7 billion).
In recent years, the core challenge facing British and American tobacco has come from disorderly competition in the US e-cigarette market — a large number of non-compliant e-cigarette products have poured into the market, seriously impacting the $22 billion new tobacco market, causing damage to corporate profits.
The company's CEO, Tadeu Marroco, pointed out that as US regulators step up efforts to rectify non-compliant e-cigarettes, related policy dividends are initially evident. He expects that next year the US e-cigarette business will no longer drag down the overall new tobacco business portfolio, including the rapidly growing oral nicotine pouch brand Velo.
However, Marroco also admits that about 70% of the US e-cigarette market still consists of unregulated products, and it is unclear when this market will become a growth engine. “We must remain cautious about our 2026 performance expectations,” he said.
Multiple challenges are dragging down medium-term growth targets
Marroco also mentioned other pressures the company will face next year, including the impact of tighter Australian tobacco regulations and continued investment in emerging product categories, which will also put some pressure on profit growth.
According to the latest guidance from British American Tobacco, the 2026 revenue growth rate will fall within the lower limit of the 3%-5% target range, and the adjusted operating profit growth rate is expected to be 4%-6%.
The company expects both revenue and adjusted operating profit to grow at around 2% for the full year of 2025. It is worth noting that, benefiting from rising demand for nicotine bag products and the gradual improvement of the US e-cigarette business, the revenue growth rate of the emerging product sector will accelerate to double-digit levels in the second half of the year.
Panmure Liberum analyst Rae Maile pointed out in a research report: “British American Tobacco's stock price performance has been strong since this year, but this performance guidance may not be the positive signal expected by the market and investors.” By the close of trading on Monday, the stock had accumulated a 50% increase this year.
Maile added that this means 2026 “will be the fourth year in a row that the company has given relatively conservative growth guidelines,” and believes that rival Imperial Tobacco (IMBBY.US) shares are more attractive in terms of valuation and growth potential.
According to analyst survey data compiled by British American Tobacco, the average market forecast for the company's total revenue growth rate in 2025 is 2.1%.