Shares in British American Tobacco (LON: BATS) tumbled at the open on Tuesday, dropping as much as 8.8% from their previous close of 4,581p to an intraday low of 3,894p, before partially recovering to trade around 4,421p — a fall of approximately 3.5% on the day — as investors digested the tobacco giant’s H1 2026 Pre-Close Trading Update.
Despite Chief Executive Tadeu Marroco insisting the company remains “firmly on track” to deliver full-year guidance, markets appeared rattled by a combination of a heavier-than-expected H2 profit weighting, a deteriorating outlook for its glo Heated Products division, and a downgraded global cigarette industry volume forecast — now expected to decline around 2.5%, worse than the previous estimate of approximately 2%.
The update did carry some bright spots. BAT upgraded its New Category revenue growth target to mid-teens for both H1 and full-year 2026, driven by the accelerating performance of its Velo Modern Oral brand and a strong U.S. Vapour recovery. Velo Plus in particular delivered standout results, lifting BAT’s total Modern Oral volume share in the U.S. by 10.4 percentage points. Vuse also extended its global value share lead, up 1.3 points in top markets.
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However, the glo brand proved a drag, with management guiding for a low double-digit revenue decline due to material inventory movements in Japan and intensifying competition in the value segment.
BAT reiterated its full-year algorithm of 3–5% revenue growth and 5–8% adjusted diluted EPS growth, though performance in 2026 is still expected at the lower end of those ranges. The company also confirmed it remains on track to reduce leverage to within 2.0–2.5x by year-end, alongside £1.3bn in share buybacks.
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