British American Tobacco Raises Profit Outlook on Strong Velo Demand

British American Tobacco has nudged its full-year earnings forecast upward, now anticipating adjusted earnings per share growth near the middle of its 5% to 8% target range. That is a more optimistic stance than the earlier expectation of the lower end. The boost comes as sales of Velo nicotine pouches surge and the United States performs well, offsetting a pronounced decline in Asia. Half-year adjusted earnings reached 164 pence a share, a 7.9% year-on-year increase and above the 158.5p consensus.

The maker of Lucky Strike and Dunhill cigarettes has kept its revenue and adjusted operating profit guidance at the low ends of their respective 3% to 5% and 4% to 6% growth ranges. That conservative revenue view had unsettled investors back in June, but the profit upgrade now suggests momentum in newer lines. As demand for traditional cigarettes softens, the company has been channelling investment into alternatives and redesigning its operations. The newest products are clearly becoming the engine of growth, while the old core business gradually shrinks.

In a restructuring announced last month, BAT plans to cut around 5,500 jobs and move about 3,500 roles to external firms, including the consultancy Accenture. The changes apply everywhere except the United States, which remains its largest market. The company has framed this as an AI-driven effort to streamline operations and reduce costs. While the details are still being worked out, the restructuring represents a significant shift in how the business will run as it pivots further away from cigarettes and towards smokeless products.

A recent decision by the U.S. Food and Drug Administration allowing the sale of certain unlicensed vapes could also work in BAT's favour. The company has estimated that regulatory opening is worth as much as £7bn. At the same time, revenue from its new categories — vapour, heated products and modern oral — grew 18% on a constant-currency basis. Within modern oral, Velo's volume share across the company's biggest markets rose by 8.4 percentage points to 39.2%, showing that pouches are becoming a mainstream choice.

For nicotine pouch buyers in Canada and the United States, these developments suggest Velo will remain a priority for BAT. Stronger earnings and market share gains give the company reason to invest further in the brand, potentially expanding flavour lines and improving availability. The restructuring outside the US indicates where the growth focus lies, and the regulatory changes may open up new opportunities. As the modern oral segment expands, pouch users can expect to see more attention and resources directed at this category in the coming quarters.