British American Tobacco - Preliminary announcement - year ended 31 December 2021

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News Release

11 February 2022

Preliminary announcement - year ended 31 December 2021

2021 – A pivotal year delivered; buyback announced

Jack Bowles, Chief Executive: “In 2021 the business delivered on our transformation journey to build A Better Tomorrow. It has been a pivotal year: we accelerated New Category revenue, with growth of over 50%* and reached a total of 18.3m consumers (up 4.8m) of our non-combustible products. New Category losses reduced for the first time, contributing to earnings growth, and we reduced leverage to c.3x, while at the same time delivering strong financial results: 2021 has been a pivotal year.

“Putting ESG at the heart of our strategy and corporate purpose is delivering sustainable growth, encouraging more consumers to transition to reduced risk products and reducing the health impact of our business. We are also on track to achieve our other ESG targets, including carbon neutrality from our operations by 2030.

“These strong foundations enable us to embark on the next phase of our journey - Faster Transformation - towards A Better Tomorrow.  We are on a path to deliver £5bn of revenue and profitability^ from New Categories by 2025 and are developing opportunities Beyond Nicotine, leveraging our knowledge and capabilities from New Categories.

“These foundations also provide the financial flexibility to be more active in our capital allocation to deliver sustainable long-term value for shareholders.  With leverage within our target range and expectations for c.£40bn of free cash flow before dividends over the next five years we will continue to invest in a faster transformation and deliver strong returns to shareholders.  In addition to maintaining a growing dividend the Board has approved a £2bn share repurchase programme for 2022.

“I would like to thank all our people and partners for their continued focus and commitment in delivering our strong results throughout this difficult COVID-19 period. The BAT of tomorrow will be a high-growth, consumer centric, multi-category consumer goods company. We are confident in delivering a Faster Transformation, continued robust financial performance and superior cash returns to shareholders.  We are confident of delivering A Better Tomorrow.”

Performance highlights
Vs 2020
Vs 2020
Cigarette and THP volume share   +10 bps    
Cigarette and THP value share   +20 bps    
Non-Combustibles consumers1 18.3m +4.8m    
Revenue (£m) £25,684m -0.4% £25,684m +6.9%
Revenue from New Categories (£m) £2,054m +42.4% £2,054m +50.9%
Profit from operations (£m) £10,234m +2.7% £11,150m +5.2%
Operating margin (%) 39.8% +120 bps +43.4% -70 bps
Diluted EPS (pence) 295.6p +6.0% 329.0p +6.6%
Net cash generated from operating activities (£m) £9,717m -0.7%    
Free cash flow after dividends (£m)     £2,543m -0.3%
Cash conversion (%)2 95.0% -320 bps +103.6% +60 bps
Borrowings3 (£m) £39,658m -9.8%    
Adjusted Net Debt (£m)     £35,548m -11.1%
Dividend per share (pence) 217.8p +1.0%    

The use of non-GAAP measures, including adjusting items and constant currencies, are further discussed on pages 46 to 51 of the full announcement, with reconciliations from the most comparable IFRS measure provided.


  1. Internal estimate.
  2. Movement in adjusted operating margin free cash flow after dividends and operating cash conversion are provided at current rates.
  3. Includes lease liabilities.

Faster Transformation

  • New Categories revenue up 51% to £2,178m*
    • Non-combustible product** consumer acquisition +4.8m to 18.3m
    • Vapour revenue up 59%*
    • glo revenue up 46%*
    • Modern Oral revenue up 41%*
  • Full Year New Category losses reduced by 9% (c.£100m)
  • Operating cash flow conversion of 104%
  • Leverage down to 3x adj net debt / adj. EBITDA
  • £2 billion 2022 buyback announced

Strong FY Results

  • Revenue up 6.9%* led by pricing and New Category growth
  • Combustible revenue up 4.0%* with price/mix of 4.3%, reflecting Emerging Market (EM) performance and COVID-19 recovery
  • Cigarette value share up 10 bps
  • Further £595m cost savings, driven by Quantum
  • Adjusted profit from operations up
    5.2%* includes a negative transactional FX impact of 1.7%
  • Adjusted operating margin down 70 bps
  • Adjusted diluted EPS up 6.6%*

* at constant rates of exchange
** These products are not risk free and are addictive.

2022 outlook:

  • Global tobacco industry volume expected to be down c.2.5%.
  • Constant currency revenue growth of 3%-5%.
  • Strong New Category revenue growth and further reduction in losses.
  • High-single figure constant currency adjusted EPS growth, with growth second half weighted.
  • Translational foreign exchange is expected to be broadly neutral on full year adjusted EPS growth.
  • Operating cash flow conversion in excess of 90%.

^ Based upon Category Contribution – defined as profit from the sale of brands after directly attributable costs (including marketing expenses) and before the allocation of overheads

Preliminary announcement - year ended 31 December 2021 (1 mb) 

Forward looking statements and other matters

This announcement contains certain forward-looking statements, including "forward-looking" statements made within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.

In particular, these forward-looking statements include, among other statements, statements regarding the Group's future financial performance, planned product launches and future regulatory developments and business objectives (including with respect to sustainability and other environmental, social and governance matters), as well as: (i) certain statements in the 2021-A Pivotal Year Delivered, Buyback Announced section and in the Chief Executive Statement (pages 1 to 2 in the preliminary announcement); (ii) certain statements in the Finance and Transformation Director’s Statement (page 2 in the preliminary announcement); (iii) certain statements in the Category Performance Review (pages 4 to 8 in the preliminary announcement); (iv) certain statements in the Regional Review section (pages 9 to 13 in the preliminary announcement); (v) certain statements in the Other Financial Information section (pages 14 to 17 in the preliminary announcement); (vi) certain statements in the Other Information section (pages 18 to 22 in the preliminary announcement); (vii) certain statements in the Notes to the Financial Statements section (pages 29 to 41 in the preliminary announcement), including the Liquidity and Contingent Liabilities and Financial Commitments sections; and (viii) certain statements in the Other Information section (pages 42 to 53 in the preliminary announcement), including the Non-GAAP Measures sections and under the heading “Dividends”.

These statements are often, but not always, made through the use of words or phrases such as "believe," "anticipate," "could," "may," "would," "should," "intend," "plan," "potential," "predict," "will," "expect," "estimate," "project," "positioned," "strategy," "outlook", "target" and similar expressions. These include statements regarding our intentions, beliefs or current expectations concerning, amongst other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the economic and business circumstances occurring from time to time in the countries and markets in which the British American Tobacco Group (the “Group”) operates, including the projected future financial and operating impacts of the COVID-19 pandemic.

All such forward-looking statements involve estimates and assumptions that are subject to risks, uncertainties and other factors. It is believed that the expectations reflected in this announcement are reasonable, but they may be affected by a wide range of variables that could cause actual results and performance to differ materially from those currently anticipated. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking statements are uncertainties related to the following: the impact of competition from illicit trade; the impact of adverse domestic or international legislation and regulation; the inability to develop, commercialise and deliver the Group’s New Categories strategy; adverse litigation and dispute outcomes and the effect of such outcomes on the Group’s financial condition; the impact of significant increases or structural changes in tobacco, nicotine and New Categories related taxes; translational and transactional foreign exchange rate exposure; changes or differences in domestic or international economic or political conditions; the ability to maintain credit ratings and to fund the business under the current capital structure; the impact of serious injury, illness or death in the workplace; adverse decisions by domestic or international regulatory bodies; and changes in the market position, businesses, financial condition, results of operations or prospects of the Group.

A review of the reasons why actual results and developments may differ materially from the expectations disclosed or implied within forward-looking statements can be found by referring to the information contained under the headings “Cautionary statement”, "Group Principal Risks" and "Group Risk Factors" in the 2020 Annual Report and Form 20-F of British American Tobacco p.l.c. (BAT). Additional information concerning these and other factors can be found in BAT's filings with the U.S. Securities and Exchange Commission ("SEC"), including the Annual Report on Form 20-F and Current Reports on Form 6-K, which may be obtained free of charge at the SEC's website, and BAT’s Annual Reports, which may be obtained free of charge from the British American Tobacco website

No statement in this announcement is intended to be a profit forecast and no statement in this communication should be interpreted to mean that earnings per share of BAT for the current or future financial years would necessarily match or exceed the historical published earnings per share of BAT. Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser. The forward-looking statements reflect knowledge and information available at the date of preparation of this announcement and BAT undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on such forward-looking statements.

All financial statements and financial information provided by or with respect to the U.S. or Reynolds American are initially prepared on the basis of U.S. GAAP and constitute the primary financial statements or financial records of the U.S. / Reynolds American. This financial information is then converted to International Financial Reporting Standards as issued by the IASB and as adopted for use in the UK (“IFRS”) for the purpose of consolidation within the results of the Group. To the extent any such financial information provided in this announcement relates to the U.S. or Reynolds American it is provided as an explanation of, or supplement to, Reynolds American’s primary U.S. GAAP based financial statements and information.

Our vapour product Vuse (including Alto, Solo, Ciro and Vibe), and certain products including Velo, Grizzly, Kodiak, Camel Snus and Granit, which are sold in the U.S., are subject to FDA regulation and no reduced-risk claims will be made as to these products without Agency clearance. 


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