British American Tobacco PLC (LSE:BATS) shares tumbled 8% despite seeming to be slightly better than expectations in terms of revenue and earnings.
Revenue for the year was down 5.2% to £25.9 billion, driven by the sale of businesses in Russia and Belarus the year before and currency headwinds, while organic revenue was up 1.3%.
Reported profit from operations swung back to a £2.7 billion positive from a loss of £15.75 billion loss the year before, as a provision of £6.2 billion in respect of the proposed settlement in Canada was less than the US charges the year before.
Adjusted organic profit was up 1.4% at constant rates.
In the fourth quarter revenue grew 1.3% compared to 0.9% growth that analysts expected, while earnings per share growth of 3.6% beat expectations of 2.0%.
The dividend was hiked 2% to 240.24p, with a £900 million share buy-back planned in 2025.
Guidance for 2025 was for global tobacco industry volume to be down around 2%, with the FTSE 100 group expecting to grow its own revenue roughly 1% at constant currency rates, while adjusted operating profit growth 1.5-2.5%.
But the performance is expected to be weighted toward the second half "as we deploy our innovations throughout the year", BAT said, noting that factors affecting revenues include increased excise and VAT in Bangladesh and new tobacco regulations in Australia, while profits are set to the clipped by a forex headwind of about 1.5%.
Chief executive Tadeu Marroco continued to emphasise the group's commitment to "building a smokeless world and becoming a predominantly smokeless business by 2035".
He said smokeless products now account for 17.5% of group revenue, an increase of one percentage point on the prior year.
"In 2025, while we expect significant regulatory and fiscal headwinds in Bangladesh and Australia to impact our combustibles performance, I am confident that we will progressively build on our delivery as we shift from investment to deployment and we remain committed to returning to our mid-term guidance of 3-5% revenue and 4-6% adjusted profit from operations* growth on a constant currency in 2026," he said.
Analysts at Panmure Liberum said the contrast between BAT and rival Japan Tobacco "is somewhat stark this morning, both in terms of content as well as in presentation, and not to BAT’s benefit".
Operating profit was "essentially flat" and there are "lots of moving parts" in the guidance for the current year related to the timing of a final settlement in Canada after 25 years, with 2025 set to be "another year without much to show in profit terms".
Overall consensus EPS for the current year of 375p "should broadly hold we think".