British American Tobacco PLC (LSE:BATS) announced an increased share buy-back of £1.3 billion for next year as it backed its outlook for this year and next.
The cigarette and vape maker now expects around 2% growth in both revenue and adjusted profit from operations for the current year, having suggested in the summer that for 1-2% revenue growth this year would enable profit to increase 1.5-2.5%.
Sales of new category products, which include Vuse vape kits, tobacco heating brand Glo and Velo nicotine pouches, increased at a double-digit percentage in the second half, supported by strong performance from Velo Plus in the US, where the product is on track for full-year profitability.
Chief executive Tadeu Marroco said: “Full-year delivery remains on track. I am particularly pleased with our momentum in the US, the world's largest nicotine value pool. Strengthened combustibles performance and enhanced commercial execution reinforce our future confidence."
He said improvements in US vapour sales were supported by "early signs" of federal and state enforcement actions against illicit products.
"Recent Vuse volume and revenue improvement in the US is encouraging, although the vapour category continues to be impacted by illicit proliferation. Over time, we believe Vuse is well-positioned to benefit from stronger Federal and State-level enforcement."
The company said it generated strong operating cash flow and expects to reduce net debt leverage to within 2.0-2.5 times adjusted EBITDA by the end of 2026.