Citi Flags Modest Organic Growth Ahead of British American Tobacco Full-Year Results: 12 Key Investor Watchpoints

British American Tobacco (BAT) is heading into its full-year results with analysts expecting a familiar mix: steady underlying growth, pressure on reported numbers, and intense investor focus on how quickly “smoke-free” products can scale while traditional cigarettes keep declining. In the latest broker commentary highlighted by Proactive, expectations are for modest organic revenue growth, but weaker reported earnings and some margin compression.

Below is a detailed, fully rewritten English news-style feature that explains what’s behind those forecasts, what investors will likely listen for on results day, and why products like glo (heated tobacco) and VELO (nicotine pouches) matter so much to BAT’s next chapter.

What the Market Is Bracing For

Broker previews ahead of BAT’s full-year print are pointing to a “two-speed” story. On one side, BAT’s brands and pricing power continue to support underlying (organic) revenue growth. On the other, reported results can look softer due to factors such as currency movements, portfolio effects, and the cost of competing in tough segments.

In the Proactive write-up, the key headline is that analysts see modest organic growth going into the full-year results, alongside margin pressure and lower earnings per share (EPS) expectations.

It’s also worth noting timing: BAT’s own investor calendar shows it plans to publish its 2025 preliminary results for the year ended 31 December 2025 on Thursday 12 February 2026 (with a webcast later that morning).

The Core Forecasts: Revenue, Profit, Margins, EPS, and Debt

The broker expectations cited by Proactive include several specific metrics that shape the narrative investors will debate:

1) Revenue: Down on a reported basis, up organically

Forecasts referenced in the preview suggest reported revenue could fall 1.6% to around £25.45bn for the 2025 financial year, even while organic revenue growth is estimated at about 2.0%.

That gap matters because “reported” performance can be pushed around by translation effects and other accounting impacts, while “organic” performance is meant to reflect the underlying health of demand, pricing, and mix. For investor sentiment, organic growth often carries more weight—especially when a company is undergoing a long-term portfolio shift.

2) Operating profit: Slight decline, with margin compression

Adjusted profit from operations is expected (in the cited broker preview) to decline about 1.3% to £11.22bn, with group margins falling roughly 190 basis points to around 44.1%.

A margin drop of that size tends to raise practical questions: Is it investment-led (spending to accelerate new products)? Is it competitive (discounting and trade spend)? Or is it structural (a long-run shift in category mix or regulatory cost)? The answers matter because they shape whether investors see the margin dip as “temporary and strategic” or “persistent and worrying.”

3) EPS: Expected to be lower than consensus

Adjusted diluted EPS is expected (per the preview) to drop about 3.1% to roughly 330.7p, which the commentary notes is below a consensus estimate of about 338.5p.

When a preview explicitly compares a broker’s number to consensus, it’s usually a hint that the “earnings bar” could be tricky. Even if the long-term story is intact, a short-term EPS miss can still move the share price—especially in a sector where many investors are sensitive to cash flow and shareholder returns.

4) Net debt: Slightly higher, leverage watched closely

The preview also points to adjusted net debt expected to rise by about £665m to around £31.25bn, equivalent to roughly 2.6x EBITDA.

Debt and leverage matter for two big reasons in tobacco: (1) investors often prize steady dividends and buybacks, which need cash, and (2) regulatory or legal shocks can be expensive. A leverage ratio around the mid-2x range can be viewed as manageable, but the direction of travel—up or down—often influences how confident investors feel about future capital returns.

Why “New Categories” Is the Main Battleground

The most important strategic theme in BAT’s story is the shift toward products that are positioned as alternatives to cigarettes. In BAT language, these are often grouped into “New Categories” (sometimes also described in the industry as smoke-free or reduced-risk categories, depending on the context and jurisdiction).

In the Proactive-linked preview, this segment is placed first among the areas investors are expected to focus on—and that ordering is not accidental. The market’s biggest question is simple:

Can BAT grow fast enough in new products to offset long-term decline in combustible tobacco volumes?

Constant currency growth expectations

In the broker’s framing, New Categories are forecast to deliver around 6.6% constant currency growth, supported by momentum across three platforms (commonly understood as heated tobacco, vaping, and modern oral/nicotine pouches).

“Constant currency” is a useful lens here because these products are sold in multiple regions. If currency swings distort the picture, constant currency figures can help investors judge whether adoption and sales are actually improving on the ground.

The medium-term “growth rate” test

Beyond a single year’s performance, investors will be watching management’s ability to sustain mid-single-digit growth over the medium term—again, exactly the kind of phrasing brokers use when they believe the market will grade management on consistency, not just one-off wins.

If the company can show repeatable growth with improving unit economics, that supports a valuation case. If growth is uneven or expensive, investors may worry that the shift is becoming a treadmill rather than a transformation.

Combustibles: Still Huge, Still Sensitive—Especially in the US

Even with a transformation story, BAT remains heavily exposed to traditional cigarettes. That’s why the outlook for combustibles is still described as a key investor focus, particularly in the US deep discount segment.

Why the “deep discount” space matters

In a high-tax, inflation-pressured environment, some consumers trade down. That can increase competition in value and discount tiers. When that happens, companies may have to spend more on promotions or accept lower margins to defend volume—both of which can feed into the margin pressure discussed earlier.

What investors will listen for: brand performance and pricing dynamics

The preview notes that investors will look for details on the performance of Doral, the impact of a double duty drawdown, and broader pricing dynamics in the segment.

Even if you’re not a tobacco specialist, the message is clear: pricing is the engine of the combustible business model, and any sign of pricing pressure can ripple through earnings expectations quickly.

glo Hilo: Early Traction Signals in Heated Tobacco

Heated tobacco is one of the most competitive parts of the “next-generation” nicotine market, and BAT’s glo platform is central to its ambitions. One device being watched is glo Hilo, described in the preview as a recent launch in Japan, Italy, and Poland.

On BAT’s own brand and innovation pages, the company describes glo Hilo as a heated product device first launched in Japan, highlighting features like a screen, fast heating, and app connectivity, and listing a launch timeframe of June 2025.

What “traction” means in practice

When analysts say they’re looking for traction, they usually mean:

Market share gains in test cities or regions
Repeat purchase and stick usage (not just one-time device trials)
Expansion plans to additional markets
Evidence of pricing power or premium mix

The preview highlights that any commentary about market share gains or additional rollouts will be important.

Why Japan is a critical proving ground

Japan has been a key market for heated tobacco adoption for years, so performance there can influence global investor confidence. Success in Japan can serve as a case study for whether a platform is strong enough to compete in mature heated-tobacco environments.

VELO: The Modern Oral Growth Engine Investors Want to See

Among BAT’s new product lines, VELO is often treated as one of the most strategically important because nicotine pouches can attract consumers looking for discreet, smoke-free options. BAT itself describes VELO as its flagship “Modern Oral” brand and positions it as a nicotine pouch product.

What BAT says VELO is

BAT’s science and brand pages describe modern oral products as pouches containing nicotine and other ingredients, used by placing the pouch between the gum and upper lip for a period of time.

In a UK-facing consumer site explanation of the category, VELO nicotine pouches are presented as small, discreet pouches designed to sit between gum and lip, enabling nicotine absorption through the mouth (with no smoke).

The investor checklist: user growth, retention, and geography

The preview notes investors will want a detailed update on VELO, including user growth, retention, and expansion into new geographies such as the UK.

This is a big deal because nicotine pouches can look great on a slide deck but still fail if:

Consumers try the product and don’t stick with it (weak retention)
Distribution is limited or inconsistent
Regulatory constraints tighten unexpectedly
Competition increases and margins shrink

So when BAT reports, investors will likely focus less on flashy launch headlines and more on whether VELO’s user base is compounding quarter after quarter.

Regulation and Illicit Vapes: The Wild Card That Moves Forecasts

Regulatory risk is always present in nicotine markets, but the preview specifically calls out the US environment, especially around illicit (unauthorized) vapes.

Why illicit vapes matter to big listed companies

Unauthorized products can distort competition. If cheaper or widely available illicit vapes flood a market, it can pressure legal products’ pricing and volumes, and it can also create reputational and political pressure across the entire category.

Examples of US enforcement activity

The US FDA has published enforcement updates and actions targeting unauthorized tobacco and vape products, including warning letters and enforcement efforts against certain disposable e-cigarette brands and retailers.

That enforcement backdrop is likely why investors will closely parse BAT’s commentary on the US market—because stronger enforcement could improve the competitive landscape for authorized products, while weak enforcement can keep pressure high.

Valuation: Why Brokers Can Stay Positive Even If Headline Metrics Dip

One of the most interesting features of the preview is that the broker maintains a positive stance despite expecting declines in some headline metrics. In the Proactive piece, the rating is reiterated as a ‘buy’, with a stated price target of 4,900p, arguing valuation looks compelling.

This is not unusual in mature cash-generative sectors. Investors may tolerate softer near-term earnings if they believe:

Cash generation remains strong enough to support dividends
The “new categories” transition is progressing credibly
Valuation multiples already price in many risks
Management is executing on cost, innovation, and distribution

In other words, the market can sometimes treat a short-term EPS dip as “acceptable” if the longer-term direction is intact and the share price already reflects cautious expectations.

What to Watch on Results Day: 12 Practical Questions Investors Will Ask

To turn all of this into a clear checklist, here are twelve questions that naturally flow from the preview and the broader context:

1) Does organic growth stay steady, and what drives it?

Is the organic uplift mostly pricing, or is there meaningful volume/mix improvement?

2) How much of the margin pressure is investment vs. competition?

Investors want to know whether margin compression is a temporary investment phase or a sign of tougher structural competition.

3) Are New Categories accelerating at a pace that changes the long-run picture?

The preview points to constant currency growth expectations; the real test is whether management can sustain that momentum.

4) Are all three New Category platforms contributing, or is growth concentrated?

Breadth matters. If only one platform performs, the strategy looks riskier.

5) What is the latest on glo Hilo—share, repeat usage, and next launches?

Early traction signals and rollout plans are expected to be key discussion points.

6) What’s the VELO story in numbers: users, retention, and UK expansion?

The preview explicitly flags these topics, which signals they are likely top-of-mind for institutions.

7) What is happening in US deep discount combustibles right now?

Pricing dynamics, promotions, and brand health (including Doral) will matter.

8) How is management describing the illicit vapes issue in the US?

Any commentary on regulation and enforcement will be closely watched.

9) Is net debt rising for a one-off reason, or is leverage drifting up?

The preview expects a rise; investors will want drivers and future direction.

10) What does guidance imply for EPS and cash generation?

Even small guidance changes can influence the valuation debate.

11) Are there any signals about competitive intensity in heated tobacco and oral nicotine?

Competition shapes marketing spend, pricing, and pace of adoption.

12) What does the company say about medium-term targets and confidence?

Markets often reward clarity—especially when the sector is heavily regulated and frequently questioned by policymakers.

How This Fits the Bigger Industry Picture

BAT isn’t transforming in a vacuum. Across the global nicotine sector, large companies are trying to diversify beyond cigarettes into smoke-free formats—heated tobacco, vaping, and oral nicotine—while defending cash flows from the traditional business.

For context on how important nicotine pouches have become to investor sentiment across the sector, Reuters has covered how market expectations around pouch performance can materially impact share prices and narratives, underscoring just how sensitive “smoke-free growth” has become for valuations.

That broader industry sensitivity helps explain why BAT’s updates on glo Hilo and VELO are treated as more than side notes—they are increasingly central to whether the market views BAT as a stable legacy cash machine, a credible transitioning consumer company, or something in between.

FAQs (Frequently Asked Questions)

1) When will British American Tobacco publish its full-year results?

BAT’s investor “Results centre” and financial calendar indicate it plans to publish its 2025 preliminary results on Thursday 12 February 2026 (UK time).

2) What does “organic revenue growth” mean in this context?

Organic growth typically refers to underlying performance excluding certain effects such as currency translation and some portfolio impacts. In the preview, revenue is expected to be down on a reported basis but up organically, highlighting that underlying momentum can differ from reported figures.

3) What are BAT’s “New Categories”?

In the broker preview, “New Categories” refers to BAT’s non-combustible growth platforms, with momentum noted across three platforms. The discussion focuses on heated tobacco (like glo), modern oral (like VELO), and other next-generation product lines.

4) What is glo Hilo, and why is it important?

glo Hilo is a heated tobacco device in BAT’s glo platform. BAT describes it as launched in Japan and highlights features such as fast heating and a screen, and investors are watching for early traction signals and further rollout plans.

5) What is VELO?

VELO is BAT’s flagship modern oral nicotine pouch brand. BAT describes modern oral products as pouches containing nicotine and other ingredients, used by placing a pouch between the gum and lip. Investors are expected to watch user growth, retention, and geographic expansion.

6) Why are “illicit vapes” a big issue in the US?

Unauthorized products can affect legal market competition and influence regulatory scrutiny. The preview suggests investors will closely parse BAT’s comments on the US regulatory environment, and FDA enforcement updates show active actions against certain unauthorized products and retailers.

Conclusion: A Results Day That’s More About Direction Than One Number

Going into BAT’s full-year results, the broker narrative highlighted by Proactive is cautious on headline metrics but focused on the bigger strategic journey: keep organic growth steady, manage margin pressure, and—most importantly—prove that New Categories can deliver durable, scalable growth.

If BAT can show credible traction in glo Hilo, deeper engagement and expansion in VELO, and a clear strategy for navigating the US deep discount combustible market and the illicit vape challenge, investors may be willing to look through softer reported numbers. If not, the market may demand a faster, clearer pathway to growth and resilience in a changing regulatory world.

External reference (via linked citation): This rewrite is based on the broker-preview reporting published by Proactive Investors.

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