In a pre-close trading statement, the company flagged a stronger second half of the year, driven by innovation in its New Categories portfolio and improvements in traditional tobacco products across key markets.
“We think the shares are already pricing in any upside from share buybacks,” said analysts at RBC Capital Markets in a note.
The company’s outlook remains consistent with consensus forecasts, which predict a modest 1.1% increase in both organic sales and profits for 2024.
The cigarette and tobacco manufacturer also confirmed its expectation of a 2% decline in global tobacco industry volumes, a metric that has weighed on the sector for years.
The company reported progress in the U.S. market, where commercial strategies, changes in wholesale inventory, and pricing adjustments have contributed to a better performance in combustibles during the second half.
Its U.S. volume share has risen by 20 basis points. Further gains were reported in Africa and the Middle East and Asia-Pacific and Middle East, where it expanded its volume and value shares.
New Categories, which include reduced-risk products like vapour and heated tobacco, remain a cornerstone of the company’s growth strategy.
While the company has provided some technical updates—revising net finance costs to £1.6 billion from £1.7 billion and lowering its projected transactional foreign exchange impact to 1.5% from 2%—it has not yet confirmed its share buyback plans of £700 million for 2024 and £900 million for 2025.
Going forward, the company expects an improved underlying performance in 2025 as it transitions from a period of major investments.
However, it has tempered expectations, emphasizing that progress toward its mid-term goals—3–5% organic revenue growth and mid-single-digit adjusted operating profit growth by 2026—will not follow a straightforward trajectory.
RBC analysts echoed this cautious sentiment, noting that the company’s acknowledgment of a “non-linear” path suggests challenges remain in achieving these targets.
For next year, consensus estimates suggest revenue growth of 1.5%, representing a slight acceleration from 2024, alongside a marginal 10-basis-point decline in EBIT margins.
