British American Tobacco Sets Horizon 2030 Targets, Sees 2026 Growth Toward Lower End of Guidance

British American Tobacco set out a new Horizon 2030 plan on Tuesday that puts faster growth and higher profitability in its non-combustible portfolio at the center of the company’s longer-term financial targets, while keeping its 2026 outlook comparatively cautious.

BAT said it expects New Category revenue to grow at a mid-teens rate through 2030 and wants New Category contribution margin to reach at least 30% by the end of the decade. For 2026, however, the company still expects group revenue growth to come in toward the lower end of its 3% to 5% range and adjusted profit from operations growth toward the lower end of its 4% to 6% range. Adjusted diluted earnings per share growth is expected toward the middle of BAT’s 5% to 8% range, with those guidance measures stated at constant exchange rates and the profit measures adjusted for Canada.

The targets were presented at BAT’s 2026 Capital Markets Day in Winston-Salem, North Carolina. The event is focused on what management calls Horizon 2030, a strategy built around the company’s cigarette business, faster-growing nicotine products and cost and cash-flow targets designed to support shareholder returns.

Horizon 2030 puts more weight on New Categories

BAT’s New Categories include Modern Oral products such as Velo nicotine pouches, Vuse vapour products and glo heated tobacco products. The new targets make clear that management expects these businesses to do more than add sales. They are also expected to become materially more profitable as BAT scales them.

The company’s Horizon 2030 presentation sets out mid-teens year-over-year New Category revenue growth through 2030 and a contribution margin above 30% by that year. BAT describes contribution as a non-GAAP performance measure. The margin goal represents a sizable step up from the 13.3% New Category contribution margin shown in the detailed table of its first-half 2026 results.

Recent operating figures help explain why management is extending the growth target. In the six months through June, New Category revenue rose 18.0% at constant exchange rates to £1.93 billion. New Category contribution rose 54.7% to £257 million. Smokeless products accounted for 19.8% of group revenue, and BAT estimated that 35 million adult consumers were using its Smokeless brands at the end of June.

Modern Oral has been the strongest part of that portfolio. BAT reported first-half Modern Oral revenue growth of 65.9% at constant exchange rates and said the category had become its largest New Category by revenue. The Horizon 2030 materials identify Modern Oral as the main growth driver, with Velo at the center of that effort.

At group level, BAT is still working with a 2030 financial framework of 3% to 5% annual revenue growth, 4% to 6% adjusted profit from operations growth and 5% to 8% adjusted diluted EPS growth. Within that mix, the presentation points to 1% to 2% growth from combustibles and mid-teens growth from New Categories.

2026 guidance remains at the lower end

The lower-end 2026 positioning is not a new downgrade. BAT had already said earlier this year that full-year performance was expected toward the lower end of its medium-term revenue and adjusted operating-profit ranges, and it repeated that position in its July half-year report.

First-half results were broadly consistent with that setup. Group revenue increased 2.9% at constant exchange rates to £12.24 billion, while adjusted profit from operations grew 3.5% on the company’s Canada-adjusted constant-currency basis. Adjusted diluted EPS on the same basis increased 7.9%.

For the full year, BAT now continues to point to the lower end of 3% to 5% revenue growth and the lower end of 4% to 6% adjusted profit from operations growth. It expects adjusted diluted EPS growth toward the middle of the 5% to 8% range. The company also said current spot exchange rates imply a roughly 2% to 2.5% translational foreign-exchange headwind to full-year adjusted diluted EPS growth.

BAT has previously attributed the lower-end 2026 positioning to the time needed to stabilise its Asia-Pacific, Middle East and Africa region and to continued investment behind premium New Category launches. Profit delivery is also expected to be weighted to the second half. Regulation, enforcement and illicit nicotine products remain material variables for the pace of growth in markets where BAT is expanding vapour and modern oral products.

Cash generation and cost savings support the longer plan

Horizon 2030 also depends on a large productivity and cash-generation program. BAT’s presentation targets about £2 billion of productivity savings from 2026 through 2030 and roughly £700 million of annualised Fit2Win benefits by 2028. The company says it expects more than £50 billion of free cash flow before dividends over the 2024 to 2030 period.

Those cash targets matter because BAT is trying to fund portfolio investment while continuing to return capital to shareholders and reduce leverage. The company has a £1.3 billion share-buyback program for 2026 and continues to target adjusted net debt to adjusted EBITDA of 2.0 to 2.5 times by year-end.

BAT is also keeping its broader portfolio targets in place. It aims to reach 50 million adult consumers of Smokeless products by 2030 and wants those products to generate 50% of group revenue by 2035. The June figure of 35 million consumers and the first-half revenue mix show the distance still to cover; first-half New Category revenue growth of 18.0% was already above the mid-teens rate BAT is targeting through 2030.

The next near-term test is whether BAT can finish 2026 inside the lower portion of its group growth ranges while continuing to expand New Category contribution. By year-end, the company is also targeting leverage within the 2.0 to 2.5 times range, giving investors a concrete measure of whether the cash-flow and balance-sheet part of Horizon 2030 is moving in step with the portfolio strategy.