Investing in BAT

Transformation driving
sustainable growth

Delivering growth by reducing harm and expanding our portfolio

Our corporate purpose is to build A Better Tomorrow™. Reducing the health impact of our business, by encouraging those smokers who would otherwise continue to smoke to switch completely to less risky alternative products, is the greatest contribution we can make to society. This means growing our New Category business and increasing the proportion of our revenue coming from New Category products as fast as possible.

Revenue growth in the global nicotine industry is accelerating through the development of New Categories, which offer reduced- risk alternatives to combustible products. To capitalise on this growth, our well-embedded consumer-centric, multi-category strategy is activated on a global scale, leveraging our insights on consumer satisfaction, innovation needs and taste. We are building the brands of the future – strong, global brands, specifically positioned in each target consumer segment.

We have set ourselves ambitious targets to reach 50 million consumers of our non-combustible products by 2030, and more than triple our revenue from New Categories from £1.3 billion in 2019 to £5 billion by 2025. These ambitions will be met through the delivery of our three clear strategic priorities:

  • To drive a step change in New Categories, to accelerate growth supported by increased investment;
  • To generate value through Combustibles, to provide the capabilities and funding; and
  • To simplify the Group, to create a stronger, faster, more agile organisation.

50m non-combustible product consumers targeted by 2030

£5bn New Categories revenue targeted by 2025

1.1bn consumers in global combustibles market to convert to potentially lower risk products

10% Group revenue from Non-Combustibles

Reducing the health and environmental impact of our business

Creating value for all our stakeholders

Our work to reduce the health and ESG impact of the business will drive growth and create shared value, delivering results that simultaneously benefit shareholders and wider society.

We will continue to create a stronger BAT by:

  • focusing on excellence in environmental management;
  • delivering a positive social impact; and
  • adhering to robust corporate governance.

This builds on our strong ESG foundations including our status as:

  • the first tobacco company to produce a Sustainability Report in 2001;
  • named in the Dow Jones Sustainability Indices for 19 consecutive years; and
  • a member of CDP Climate A List.

Our commitments are anchored in challenging targets, against which we will track and share the progress of our transformation.

Meanwhile, our “delivery with integrity” programme is focussed on ensuring that our ethical standards are never compromised for the sake of results.

A-List member of the CDP Climate A-List

Carbon Neutral operations by 2030

19th consecutive year in the Dow Jones Sustainability Indices

100% of plastic packaging to be reuseable, recyclable or compostable by 2025

Unrivalled global capabilities

Leveraging proven expertise and developing new capabilities to deliver our ambitions

Our New Category portfolio benefits from decades of insights and expertise that have driven our No.1 global revenue position in combustibles (ex China). This combined with increased investment behind new capabilities gives us confidence that we can deliver our medium to long-term ambitions.

Our three global New Category brands leverage the benefits of our world class R&D and our manufacturing, distribution, marketing and brand building capabilities, which are supported by our unrivalled global footprint across 180 markets, with 11 million points of sale, reaching 150 million consumers daily.

Together with our long-standing experience operating within complex regulatory, legal and fiscal frameworks, these provide BAT with a compelling competitive advantage to drive portfolio growth and transformation within the wider tobacco industry.

Through Project Quantum, our ongoing business simplification programme, we aim to achieve a minimum of £1 billion of annualised savings by end 2022 to invest in new capabilities in areas such as:

  • data analytics;
  • enhanced consumer insight;
  • IP and innovation;
  • design and technology; and
  • e-commerce, enabling our ongoing digital transformation.

We are attracting new senior talent from a diverse range of industries globally to further enhance our current and future capabilities, which will enable us to deliver on our growth ambitions over the medium to long-term.

1,500 dedicated scientists and engineers

>£1bn annualised savings by 2022

>11m points of sale

>180 markets in which we operate

>150m daily-consumer interactions

Continuing our track record of delivery

Commitment to deliver returns and cashflow to shareholders

We are confident in our growth outlook, and have a proven track record of performance whatever the external environment.

We have delivered @10% adjusted diluted EPS (at constant rates) and@ 7% dividend CAGR over the last 10 years and are confident in our medium-term targets of 3-5% revenue growth (excluding currency, increased operating margin and high-single digit adjusted EPS growth.

This will be driven by:

  • accelerated New Category revenue growth;
  • continued value growth in combustibles; and
  • business simplification to eliminate cost and improve returns, to become a stronger, simpler, more agile organisation.

With strong profitability and >90% operating cash conversion, we are committed to deleveraging the balance sheet to our long term corridor of 2 to 3x adjusted net debt / adjusted EBITDA, in combination with a progressive dividend policy.

High Single Digit medium-term adjusted diluted EPS growth target (at cc)

3-5% medium-term revenue growth target (at cc)

>90% operating cash conversion targeted annually

10% adj. diluted EPS average growth (at cc) over 10 years@

7% dividend CAGR over 10 years

Data centre

for BAT's historical financial results

This section enables you to analyse BAT's historical financial results on a half-yearly basis.

Our Data centre

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