British American Tobacco p.l.c. Q4 FY2025 earnings call

• Added 4.7 million smokeless consumers, total now 34.1 million, mainly from Modern Oral. - Delivered 2025 group results at top end of guidance, driven by Combustibles and Velo. - New Categories revenue grew 7%, with Modern Oral up 48%. - U.S. returned to revenue and profit growth since 2022, gained 30 basis points of combustibles value share. - Premium innovation launches in New Categories, e.g., Velo Shift, Vuse Ultra, glo Hilo. - Progress in New Categories profitability, with category contribution improvement.

New Categories revenue grew by 7%, with Modern Oral up strongly by 48% and heated products up 1%, while Vapour declined nearly 9%. Combustible revenue grew 1%. In the U.S., Combustibles revenue increased 4.6%, New Category grew nearly 20%. AME revenue grew over 3%, New Category up 4.3%. APMEA revenue declined 7.2%.

• Expect 2026 to be at lower end of midterm algorithm ranges: 3% to 5% revenue growth, 4% to 6% adjusted profit from operations growth, 5% to 8% adjusted diluted EPS growth. - Return to midterm algorithm in 2026 marks major milestone. - 2026 performance expected to be second half weighted due to New Category investment phasing and Fit2Win savings build.

• Vapour impacted by illicit pressures in U.S. and Canada. - APMEA faces fiscal and regulatory headwinds in Bangladesh and Australia. - Vapour revenue decline in AME due to lack of illicit enforcement and regulatory changes. - Australia's combustible market impacted by high illicit activity and regulatory issues.

Q: What are your expectations in terms of performance in the U.S. in fiscal '26 for Modern Oral specifically?

A: We believe Velo Plus is competitive, with high retention rate, low brand awareness, and potential for growth as consumption increases.

Q: Could you share factors that could result in the performance getting you to the middle or even upper half of the range in '26?

A: Less drag from APMEA, more effective enforcement in Vapour, and stronger performance in Heated Products with revamped offers.

Q: How do you think about share progressing through 2026 in heated tobacco, especially with intensifying competition?

A: Revamped glo Hyper and glo Hilo will strengthen position, with glo Hilo showing early positive momentum.

Q: What percentage of your U.S. volume portfolio is benefiting from excise duty drawback?

A: Not disclosing specific percentage, but revenue in Combustible would be positive independent of drawback.

Q: Is the tailwind from duty drawback going to be more or less in 2026?

A: It will be a peak, and we are focusing on strengthening New Categories outside Combustible