British American Tobacco PLC (LSE:BATS) has doubled down on guidance for the full year and flagged improving profitability from its non-tobacco products.
Both revenue and adjusted profit over the year climbed in line with guidance for low-single-figure organic growth, the cigarette maker said on Wednesday.
Profitability from non-tobacco, or new category, products improved further, while revenue growth was set to have accelerated over the second half.
Such products include the likes of vapes and oral nicotine pouches, with the company noting it was progressing towards being a “smokeless” business by 2035.
“Our second-half performance acceleration is driven by the phasing of new categories innovation, the benefits of investment in US commercial actions and the unwind of wholesaler inventory movements,” chief executive Tadeu Marroco commented.
A foreign exchange headwind of around 4.5% was expected, while net finance costs were guided at roughly £1.6 billion.
Gross capital expenditure would sit around £600 million, British American Tobacco added, with operating cash flow conversion said to exceed 90%.
“Our quality growth imperative is delivering higher returns on more targeted investments across all three new categories, and that prioritisation and focus is already transforming our business in Europe,” Marroco added.
“We are making further progress increasing profitability across new categories, and I am particularly pleased with the improvements in heated products and modern oral.”