BAT annual profit rises as Velo gains US market share

Feb 12 (Reuters) – Lucky Strike maker British American Tobacco reported a 2.3% rise in annual profit on Thursday to 11.28 billion pounds ($15.36 billion), as its Velo nicotine pouch gained market share and sales of its newer vapes and heated tobacco products grew.

The Velo nicotine pouch is winning market share from Philip Morris’ Zyn and Altria’s label On! in the key U.S. market, partly due to its offering higher nicotine strengths and introductory offers as BAT grows the brand.

This helped BAT’s revenue from a portfolio of newer products, which also includes vapour and heated tobacco, grow by double digits in the second half, and 7% for the year.

CEO Tadeu Marroco said in an earnings statement that Velo now holds the second-highest market share in the U.S., behind Zyn, and that uptake of its Vuse vape was improving despite continued pressure from unregulated products on the market.

BAT’s total revenue rose 2.1% to 25.61 billion pounds, with smoking alternatives now making up more than 18% of total sales.

It reiterated its aim to achieve the lower end of its medium-term targets of 3% to 5% revenue growth and 4% to 6% adjusted operating profit growth in 2026.

($1 = 0.7344 pounds)

(Reporting by Nithyashree R B and Shashwat Awasthi in Bengaluru; Editing by Janane Venkatraman and Joe Bavier)