Full Year 2024 British American Tobacco PLC Earnings Call
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Good morning, everyone. I'm delighted to welcome you to our 2024 Preliminary Results presentation. With me this morning is Soraya Benchikh, CFO and Victoria Buxton, Group Head of Investors Relations.
I will begin with our transformation highlights and the progress we have made during our investment year.
Soraya will then take you through our financial results in more detail, before I return to talk more about our performance outlook ahead of Q&A.
With that, I would like to draw your attention to the disclaimers on slide two.
and three
Let's begin by looking at the positive transformation momentum we are driving, starting with some highlights.
2024 was a key moment in our transformation journey as we sharpened our execution, enabling us to navigate near-term market challenges and deliver an improved performance in the second half.
We have delivered group results in line with expectations, which Soraya will talk about in more detail.
Smokeless accounts for 17.5% of group revenue, up one percentage point versus last year.
We added 3.6 million smokeless consumers, reaching 29.1 million, mainly driven by our continued success in modern oil.
Our focus on quality growth, balancing.
top and bottom line delivery has driven a further improvement in new category contribution up to £151 million.
and a 7 percentage point increase in our category contribution margin on an organic constant rates basis.
We are committed to rewarding shareholders with strong cash returns, and I am pleased with our progress improving financial flexibility.
Our foundations are solid and I am confident that the choices we have made and the actions we have taken through our investment year are the right way forward for BAT.
I have been clear that we needed to invest to strengthen our U.S. business, accelerate innovation momentum, and enhance capabilities that support our strategic delivery.
While there is more to do, we are making clear progress. Our previously announced commercial plans in the U.S. are completed, and I'm encouraged that our performance accelerated in the second half.
Through our improved innovation ecosystem, our new category growth accelerated in the second half, driven by Glow Hyper Pro and our refreshed VeloMix in the US.
Furthermore, we are excited about the Q4 launchings of our latest innovations including VeloPlus.
As previously highlighted, we do not expect the journey ahead to be linear. We will share more detail on the key drivers and assumptions behind our 2025 guidance later in the presentation.
And with that, I will hand over to Soraya to take you through our results in more detail.
Soraya Benchikh: Thank you, Tadeu, and good morning, everyone. Before diving into the results and to set the context, I would like to remind you of my key focus areas.
Soraya Benchikh: The first is to fuel our transformation by maximizing sustainable value from combustibles.
Soraya Benchikh: The second is to drive quality growth in new categories by investing capital in a disciplined manner targeting the largest profit pools and maintaining a laser focus on returns.
The third is to strengthen our financial resilience.
Soraya Benchikh: And even though we have reached our target debt corridor including Canada in 2024, by 2026 we aim to be within this corridor excluding Canada whilst remaining committed to our balanced capital allocation.
Soraya Benchikh: Now, with this in mind, I'd like to share our progress in 2024 as we move to the results.
Soraya Benchikh: I am pleased to share that we delivered organic constant currency results in line with guidance.
Soraya Benchikh: Whilst our reported results reflect a number of adjusting items, including our exit from Russia and Belarus, a provision of £6.2 billion for Canada's CCAA proposed plan,
A charge in Romania in respect of an excise assessment
Soraya Benchikh: and the 1.6 billion gained due to the partial sale of our ICC investment.
Soraya Benchikh: To understand the underlying performance, we will focus on organic adjusted constant currency results. More details on adjusting items are in the appendices.
Soraya Benchikh: So, in line with our guidance, group revenue grew by 1.3%, new category revenue grew by 8.9%, and adjusted operating profit rose 1.4%.
and diluted EPS increased by 3.6%.
So looking at some of the key drivers.
price makes growth, with pricing up nearly 9%
Soraya Benchikh: Adjusted gross profit expanded by £400 million, supported by revenue growth management and new category scale benefits.
Soraya Benchikh: Excluding the US, we delivered 5.1% revenue growth and 7.5% operating profit growth.
Soraya Benchikh: This highlights the strength of our multi-category portfolio and resilience of our global footprint.
Soraya Benchikh: As expected, new category revenue growth accelerated in the second half. We achieved quality growth with contribution margin rising to 7%.
Soraya Benchikh: This reflects our targeted investment in high-value profit pools, focused ROI discipline and scaling benefits across markets.
I will now provide more details.
Soraya Benchikh: and all shared data is based on full year averages unless otherwise stated and further information is again available in the appendices.
Soraya Benchikh: Let's start with vapor. Vapor is the largest new category globally with consumer numbers accelerating.
Soraya Benchikh: While category fundamentals are strong, weak enforcement against illicit single-use vapes in the US and Canada has distorted competition.
Soraya Benchikh: Vapor revenue fell by 2.5% and growth in Europe, led by Views Go Reload, was offset by illicit market challenges.
Soraya Benchikh: VIEWS remains the value share leader both globally and in the U.S. where we are demonstrating strong financial resilience.
Soraya Benchikh: U.S. volumes declined by 4 percent, but they were outperforming the 9 percent industry decline in track channels.
Soraya Benchikh: But without stronger enforcement, illicit vapour products will continue to impact the legal market.
Soraya Benchikh: In AME, we retained value share leadership at 31.5%. Gains in France, Spain and Germany lifted value share by 100 basis points.
of course excluding Canada's losses from Quebec's flavour ban.
Soraya Benchikh: The UK and France, however, will likely face short-term disruption from single-use vapor bans in 2025, but we are well-positioned for long-term growth.
Soraya Benchikh: In Apmea, revenue grew 24% driven by strong momentum in South Korea and New Zealand.
Moving on to heated products.
Soraya Benchikh: In heated products, industry growth slowed, impacted by increased new category poly usage in Europe.
Soraya Benchikh: Glow revenue was up nearly 6% with a stronger H2 performance as expected.
Soraya Benchikh: GloPro helped improve volume share with a small decline of 40 basis points versus the 110 basis points in 2023.
Soraya Benchikh: In Japan, pro-consumables gained 110 basis points in volume share, partly offsetting the decline of legacy super-slims.
Soraya Benchikh: In AME, category volume shares stabilized with strong gains in Poland and the Czech Republic and continued improvement in Italy.
Soraya Benchikh: Our tobacco free range Veo continues to outperform, strongly outperform Pears.
Soraya Benchikh: We have driven a more balanced GLOW performance with improved category contribution in 2024, driven by scale benefits and pricing.
Soraya Benchikh: And last but not least, we move on to Modern Moral, which is the fastest-growing new category.
Soraya Benchikh: Usage and daily consumption are rising in both key and new markets.
Soraya Benchikh: Our revenue grew 53% in Modern Oral in 2024, with strong growth across all regions, improving category contribution.
Our category share increased.
Soraya Benchikh: with volume share up 130 basis points and in AME, we led the model category with 65% volume share and VELO captured 70% of category revenue growth.
This performance proves Velo is the leading brand.
and product in the category.
Soraya Benchikh: We gained over 2 percentage points in volume share, reaching 6.6% and 18% in New York in December, where this mix was first introduced.
Soraya Benchikh: We expanded our U.S. portfolio with VeloPlus at the end of the year, which Tadeu will discuss later.
Soraya Benchikh: In combustibles, our volumes declined 5% organically, mainly due to the U.S.
Soraya Benchikh: market exits and supply chain issues in Sudan also affected performance
Soraya Benchikh: Our volume share grew by 20 basis points, with a strong performance in Brazil, Bangladesh, Mexico and Pakistan.
Value share declined 20 basis points driven by the U.S.
Soraya Benchikh: Our U.S. commercial investments in H1 helped recover volume and value share in the second half.
Soraya Benchikh: Revenue was marginally higher with growth in AME and APMEA led by Brazil and an APMEA led by Brazil, Japan and Turkey offsetting the U.S.
Soraya Benchikh: Now, turning to our regions, our U.S. revenue declined by 3.4 percent, mainly driven by the commercial actions implemented over the last 18 months.
Soraya Benchikh: in addition to ongoing macroeconomic pressures impacting affordability and illicit vapor products affecting both combustibles and vapor.
Soraya Benchikh: The combustibles industry declined by around 9% on a sales to retail basis.
Soraya Benchikh: Excluding the discount, where we are not present, the industry declined 11% while our volume was down 10.1%.
Soraya Benchikh: 4% of the industry decline was due to new category polyx usage, with illicit vapor contributing 2.5% of deaths.
Soraya Benchikh: Our U.S. financial performance improved throughout the year, driven by a strong performance in combustibles versus 2023.
Soraya Benchikh: Adjusting operating profit fell 3.5% due to lower combustible volume and commercial spending.
Tadeu will provide further U.S. updates later.
Soraya Benchikh: Moving to AME. AME is a multi-category region with smokeless revenue now making up 24% in markets where we are present in new categories.
Soraya Benchikh: 11 of those markets now generate over 50% of their revenue from smokeless products.
Soraya Benchikh: Revenue grew nearly 5%, driven by higher combustibles revenue, supported by solid volume and strong pricing.
and double-digit new category growth, with modern oral up 47%.
Soraya Benchikh: and Acmea, growth improved in H2 and Smokeless now represents 20% of revenue in markets where we are present with new categories.
Soraya Benchikh: Total revenue grew by 5.4% with combustibles up 3.5% driven by pricing gains partly offset by the declines in Australia and supply chain disruptions in Sudan.
Soraya Benchikh: New category revenue grew nearly 9%, led by vapor and modern oral gains in emerging markets, and heated products benefiting from innovation and lapping Japan's prior year commercial plans.
Adjusted operating profit increased 7.5% supported by pricing
and improved performance in Japan, asset sales and efficiency gains.
Soraya Benchikh: Now the group operating margin was flat as we offset inflation and forex pressures with higher new category profitability and cost savings.
BHE has a strong track record in delivering cost savings.
Soraya Benchikh: These savings helped offset inflation and forex impacts while funding quality growth investments.
and 1.1
Inflationary pressures are expected to ease this year.
Soraya Benchikh: Beyond 2025, we aim to simplify combustibles and drive scale benefits in new categories, targeting an additional £2 billion in savings by 2030.
Soraya Benchikh: EPS grew 3.6%. Gains from lower net finance costs and share count were partly offset by our reduced share of ITC profits and tax.
Soraya Benchikh: The underlying tax rate was 24.9% and we expect around 25% in 2025 based on prevailing rates.
Soraya Benchikh: Operating cash conversion exceeded 100% for the fifth year, reflecting our strong cash discipline.
Soraya Benchikh: In 2025, we anticipate £650 million of gross capex and £1.8 billion net finance costs adjusted for Canada.
Soraya Benchikh: Our debt profile is strong, with 87% of our net debt fixed, with average maturity of just under 10 years and close currency matching.
which adjusted for Canada would be 2.75 times.
Soraya Benchikh: We expect to be back within our target leverage range of two to two and a half times both court approval and implementation of the proposed plans by the end of 2026.
Soraya Benchikh: We support the proposed CCAA settlement which maximizes value for claimants while securing our continued operation in Canada.
Soraya Benchikh: In accounting for the proposed settlement, we will continue to fully consolidate our Canadian business in accordance with IFRS.
Soraya Benchikh: We have recognized a 6.2 billion pound provision in our 2024 reported results and this is treated as an adjusting item in line with our accounting policies.
Soraya Benchikh: In order to ensure that the P&L reflects the economic delivery from Canada, from 2025 we will report APFO adjusted for Canada.
Soraya Benchikh: Now, due to the uncertainty of the timing of the settlement in 2025, our non-GAAP reported numbers will remove 100% of our Canadian business, excluding new categories.
Soraya Benchikh: with 2024 comparators provided on the same basis in the appendices.
Soraya Benchikh: It is important to note that we will continue to fully consolidate our revenue in Canada.
subject to the settlement conclusion in 2025.
Soraya Benchikh: From 2026, we will adjust to remove 85% of our Canadian APFO in line with the charging schedule.
excluding new categories.
Soraya Benchikh: which we will reduce to 80% 5 years post-settlement and 75% 10 years post-settlement.
Soraya Benchikh: After six years and CCAA protection we are pleased to have reached this stage and our accounting treatment set out today is based on the current status of the proposed plan.
Soraya Benchikh: We are hopeful for a swift resolution and remain committed to our capital allocation priorities.
BAT is a highly cash-generative company.
Soraya Benchikh: and we are expecting to deliver over 50 billion pounds of free cash flow between 2024 and 2030.
We remain committed to our capital allocation priorities of
Soraya Benchikh: Firstly, reinvesting in our transformation whilst balancing deleveraging and progressive dividends and sustainable share buybacks and selective bolt-on M&A to accelerate our transformation.
Looking ahead, we expect significant headwinds in Bangladesh and Australia.
Soraya Benchikh: In January, the interim government in Bangladesh increased VAT and supplementary duty on over 100 essential products, including tobacco.
Soraya Benchikh: In Australia, new tobacco regulations representing the biggest reforms since plain packaging in 2012 will come into effect from April 1st.
Soraya Benchikh: In addition, recent ad hoc excise increases, most recently last September, are already accelerating industry volume decline.
Soraya Benchikh: Last year illicit trade was up six percentage points to 36% of industry volume, while smoking incidence has remained stable for the last five years.
Soraya Benchikh: Combined with the vapour incidence, which is currently at 9%, this means that around 65% of nicotine usage in Australia is illicit.
Soraya Benchikh: Looking forward, we expect this ineffective government policy to further accelerate legal industry volume decline.
Soraya Benchikh: and coupled with the announced incremental impact of another excise increase in September to continue to significantly fuel illicit trade.
Soraya Benchikh: Together, we expect these two headwinds, both in Australia and in Bangladesh, to impact our 2025 group revenue.
Soraya Benchikh: Group Revenue Growth by 1% and Group APFO Growth by close to 2%.
Soraya Benchikh: with the January budget and Bangladesh being the main driver of change since our December trading update.
Soraya Benchikh: As a result, and including these impacts, in 2025, we expect to deliver revenue growth of around 1%.
Soraya Benchikh: The key drivers are an improving U.S. financial performance, returning to growth,
despite continued macro and illicit trade headwinds.
Soraya Benchikh: another solid AME performance and further strong growth from VELO globally.
Soraya Benchikh: Alongside the expected launch of exciting innovations for all three new categories throughout the year, we expect to grow APFO ahead of revenue, supported by continued strong new category growth contribution.
and the laser focus on ROI and further cost savings.
Soraya Benchikh: We expect our group performance to be second-half weighted for both revenue and profit as we deploy our new category innovations throughout the year.
with our first half performance reflecting progress in the U.S.
driven by combustibles and modern oral
Soraya Benchikh: and the continued lack of enforcement in the U.S. and Canada, together with the Mexico paper ban.
Soraya Benchikh: As highlighted at our Capital Markets Day, we will continue to track key KPIs across all pillars to measure our transformation success.
So
Soraya Benchikh: In summary, 2024 was an investment year and I'm pleased to see our progress reflected in our key metrics.
Soraya Benchikh: We have deployed dashboards across business units to enhance decision-making. These dashboards focus on
Soraya Benchikh: on our transformation to deliver long-term growth, return on investment to ensure financial discipline, and cash flow and leverage to maintain financial strength.
Soraya Benchikh: I am confident these metrics will help us create a sustainable shareholder value and with that I'll hand it back to Tadeu.
Tadeu: So, thank you, Soraya. I would now like to spend a few moments outlining the pathway ahead.
BAT is transforming.
Tadeu: With our multi-category strategy and global footprint, we are well positioned in a growing industry.
Tadeu: I believe we have the right strategy, the right capabilities, and the right people to deliver a profitable transformation.
Tadeu: while delivering strong returns to shareholders and making progress towards our vision of building a smokeless world.
Tadeu: At our Capital Market Day in October, I shared these 10 key reasons why I fundamentally believe in the future growth prospects of VAT.
Tadeu: Many of the broader themes have been touched on by Soraya, and I would like now to share some additional color on our confidence in these six key areas highlighted in the slide.
Tadeu: First, BAT is well positioned within the value of the nicotine industry growing at an accelerated pace.
as consumers around the world increasingly switch to new categories.
Second, we have transformed our entire innovation ecosystem.
Tadeu: This has allowed us to step change our product portfolio based on our consumer insights.
Tadeu: We have developed an exciting innovation pipeline across our new categories.
that we will deploy in a target way through 2025.
Tadeu: As highlighted at our CMD, Glow Hilo is a breakthrough system that we believe will reshape the way glow is positioned in the category.
Tadeu: allowing us to compete effectively in the premium segment that represents over 80% of industry value.
Tadeu: We launched our first two-piece premium device in Serbia in November.
Tadeu: We are collecting insights and learnings, and we are encouraged by the results in the markets to date.
Tadeu: Hilo and our new consumables Virtu and Rivo are resonating well with the majority of acquired consumers new to the Glow brand family.
Tadeu: We will share further updates as we continue to roll out this exciting new platform from mid-2025.
Tadeu: In Vapor, VU's Ultra will be our initial step in offering consumers premium vapor products.
Tadeu: An untapped opportunity representing just 3% of vapor category value today.
Tadeu: VIEWS ULTRA is a new vapor solution, delivering a responsible, high quality and satisfying experience for vapor consumers and positions VIEWS as a brand that consumers can trust.
Tadeu: Our targeted rollout plans are commencing this quarter in Canada and will continue through the year.
Tadeu: Modern oil in the U.S. continues to grow strongly, and I am pleased by the progress we are making with our existing portfolio, as highlighted by Soraya.
Tadeu: Looking ahead, I'm excited about our portfolio expansion with VeloPlus, which we launched at the end of last year in seven flavors and two nicotine strands.
Tadeu: Veloplus is a higher moisture product and we are delivering very encouraging early results including strong uptake driven by adult consumer demand and trial with our total volume share of Borden Auro above 10% in the latest reading
Tadeu: We will continue the rollout through the first half with a full activation plan across retailer, media and digital platforms.
Tadeu: My next reason to believe is demonstrated by the growth and delivery of our business in Europe, where more than a third of total nicotine consumers are actively using new categories.
Tadeu: Driven by our quality growth focus, our new categories have been game changers for our delivery in Europe as illustrated in these charts.
Tadeu: New category growth has both enabled our European business to exceed our group mid-term revenue guidance and also enabled significant increases in absolute category contribution through scale and efficiencies.
Tadeu: The next reason to believe is our U.S. business, which remains the cornerstone of our future.
Tadeu: As we highlighted at our CMD, one-third of the global adult nicotine value pool is located here, with the industry continuing to grow at pace.
Tadeu: I'm encouraged that our investment approach, taken over the last 18 months to strengthen our business, is working.
Tadeu: In combustibles, we have expanded our contracted distribution universe to 88% coverage.
Tadeu: resulting in a 3.2% point increase in volume share in these newly-contracted outlets, with share gains across our brands.
Tadeu: In addition, this has led to a 1.2 percentage point decline in the deeper discount segment in these outlets.
Tadeu: In premium, we have invested in Newport SoftPak in key investment states creating a leather portfolio.
Tadeu: Alongside these, we have driven consistent value-share gains in both the premium segment with Natural American Spirit and in the branded value segment with Lucky Strike, which remains the fastest-growing cigarette brand in the market.
Tadeu: A key feature of our industry in recent years has been the strength of the deep discount segment, as consumers look to make their dollars stretch further.
Tadeu: In 2024, we have seen a slowdown in deep discount volume growth.
Tadeu: At the same time, the branded value segment has grown volume share, with BAT increasing its segment share, led by Lucky Strike.
while the lower-end adult consumer clearly remains under pressure.
Tadeu: We believe these segment dynamics, alongside improved consumer confidence levels, demonstrate some early indicators of progress towards recovery, which would provide a tailwind in the medium term.
Tadeu: Moving forward, in order to have an even sharper view of market performance, we are switching to a retail sales data share rate.
Tadeu: with enhanced coverage, improving both decision quality and decision speed, which we expect will support us in sharpening our execution.
Tadeu: We are beginning to see returns on our completed, previously planned investments in the U.S. as we move towards value creation.
Tadeu: Our total volume share stabilized in 2024. Excluding the deep discount segment where we are not present, we grew volume share by 40 basis points.
Tadeu: It's important to note that 95% of the U.S. combustible's value pool sits outside of the deeper discount segment.
Tadeu: And we believe we have turned an important corner with the U.S. returning to growth and look forward to continued improved delivery to our group performance in 2025 and 2026.
Tadeu: Turning to regulation, we are encouraged by the withdrawal of a possible mental ban and freeze of previous rulemaking as the new administration reconsiders proposed regulations including very low nicotine.
Tadeu: In new categories, our success in Europe demonstrates our ability to effectively compete on a level regulatory playing field.
Tadeu: And we continue to work hard to achieve this in the U.S. by advocating for more appropriate regulation and enforcement, especially in vapor.
Tadeu: During 2024, we saw an increase in enforcement action from the FDA.
Tadeu: However, the success of legal products depends on the FDA doing more to tackle illicit vapour.
Tadeu: To support this, we continue to advocate for the publication of a PMTA list.
which would provide clarity to all market participants.
Tadeu: In addition, the U.S. International Trade Commission continues to investigate our patent infringement complaint regarding these illicit products.
Tadeu: At the state level, Vapor Directory or enforcement legislation has now been passed in 14 states.
Tadeu: meaning that around 30% of the tracked vapor industry volume will be covered by state directories by the end of this year.
Tadeu: Louisiana, a powerful example of what can be achieved, shows that well-constructed regulation can work and it's paired with proper enforcement.
Tadeu: Since implementation, the legal vapor market in Louisiana has grown by 33% with a 91% reduction of single-use illicit products in tracking channels.
Speaker Change: ViewsAuto continues to capture the majority of the volume outflow back into the legal segment.
Speaker Change: In the meantime, nationally, illicit vapor products continue to impact the legal market. We have seen this trend accelerate legal industry declines towards the end of last year, and we expect this to continue in 2025.
Speaker Change: While we are optimistic that government engagement actions will drive a more level playing field over time, we do not expect these actions to have any meaningful impact on our near-term performance.
Thank you very much.
Speaker Change: Of course, effective regulation and enforcement is not just our U.S. focus. We have significant experience and capability in this area, built over decades to connect science, corporate and regulatory affairs towards a sustainable future.
Speaker Change: We have created OMNI, which brings together scientific evidence to shift broader stakeholder perception of tobacco harm reduction.
Speaker Change: We strongly believe that regulators should embrace tobacco harm reduction led by science and backed by robust enforcement to accelerate the reduction in smoking prevalence.
Speaker Change: Regulators who do not engage in this area will not only slow the pace of transformation that society needs, but we also see rapid growth in illegal products.
Speaker Change: Leveraging science and the Omni, we are pursuing a more proactive engagement approach with global regulators, with encouraging progress on regulatory change in some areas.
and we will continue to amplify our message.
Speaker Change: Now, since becoming Chief Executive, I have been clear that building on our foundations of integrity, collaboration and inclusivity, we will drive the culture we need to successfully transform BAT.
Speaker Change: Guided by our 2030 people strategy, we are already making great progress.
Speaker Change: We have a highly engaged and committed workforce, and our refreshed values are resonating strongly.
Speaker Change: Our employer value proposition is attracting talent. And we are also making progress in advancing our diversity and inclusion agenda.
all working towards one goal
Speaker Change: driving a cultural transformation that enables an exciting and winning company for a better tomorrow.
Speaker Change: Finally, before we conclude, I want to share our priorities for 2025.
Speaker Change: As you can see, our first priority is our quality growth focus to ensure we roll out new innovations in a targeted way, balancing top and bottom line delivery.
We are committed to driving value from our combustible business.
Speaker Change: This is key to fund our transformation, and the U.S. will be an important driver of this.
Speaker Change: We will amplify our proactive approach to regulatory affairs powered by science and the Omni.
Speaker Change: All of these will be executed with a returns focus in terms of both cash generation and continue to build a track record of delivery.
Speaker Change: In 2025, I'm confident that we will build on our investment-a-year foundations.
Soraya Benchikh: As Soraya has highlighted, our 2025 guidance includes significant combustible headwinds in Bangladesh and Australia.
Soraya Benchikh: Together, these represent a 1% impact on group revenue and close to 2% on group EPFO, which is already embedded in our guidance.
Soraya Benchikh: Looking into 2026, I am confident that we will build on our underlying momentum through 2025 to deliver 3-5% revenue growth and 4-6% APFO growth adjusted for Canada on a constant currency basis.
Soraya Benchikh: We expect the key drivers to include further improvement in our U.S. financial performance, supported by a less negative backdrop from industry volume, the macro environment, and more meaningful enforcement against illicit vapor.
Soraya Benchikh: Second, quality growth driven by our new category innovations, and third, lapping the 2025 combustible headwinds in Bangladesh and investments in our innovation rollouts.
Soraya Benchikh: And fourth, I step up in efficiencies with our £2 billion savings programme to 2030.
Soraya Benchikh: While there is more to do, I am confident that we have the right strategy, capabilities and people to deliver profitable transformation.
Soraya Benchikh: I'm excited about the future for BAT and I believe we will deliver long-term sustainable growth and value for all our stakeholders.
Thank you for listening.
Soraya Benchikh: We will now be joined on stage by Victoria for the question and answer session.
Thank you very much.
Thank you, Tadeu and Soraya, and good morning, everyone.
Soraya Benchikh: If you joined us via the webcast, you can type your questions directly into the online question box.
Thank you very much, Victoria.
Soraya Benchikh: Today's very first question is coming from Farhad McVeigh of UBS. Please go ahead, your line is open.
Farhad McVeigh: Good morning guys. Thank you for taking my questions. I may take the liberty of three please.
Farhad McVeigh: Two clarification ones. I want to start with the US, please. I think you mentioned
Farhad McVeigh: twice in your remarks that you expect a recovery in the U.S. financial performance and a return to growth despite continuing to assume a challenging environment from a macro perspective and an illicit vape enforcement. So could you maybe clarify some of the...
Tadeu Marroco, Victoria Buxton, Soraya Benchikh
Speaker Change: Yeah, you are right. Our expectation is that the U.S. goes back to growth. We have three difficult years in combustible since 2022, 23, 24. The last two years basically an investment year for us to get back where we should. We fixed and we invested in a number of areas that I described in my presentation.
Speaker Change: Obviously, we'll be lapping a lower base in 2024. This is one of the reasons why.
Speaker Change: we will be having, the comparator will be a lower base in 24 and also we will be building on the positions that I just showed in terms of where we stand in terms of market share we have great momentum behind Luck Strike brand but also Newport has stabilized and now with all the laddering that we have done
Speaker Change: plus capabilities on the digital side that we have been investing.
Speaker Change: We have an expectation that we'll be back to the positive territory in 2025.
Speaker Change: On the new categories, obviously, VeloPlus is doing extremely well, as I mentioned, and this will be very supportive of the progress in new categories in the US.
Speaker Change: The concern we have, as I described it, we are not expecting major change in terms of the dynamic of the illegal vapor market. This will be a headwind.
Speaker Change: in 2025 that we hope that we can cover through the new categories in modern or specifically. So overall, we expect the U.S. being back on growth from 2025 onwards.
Speaker Change: Thanks Tadeu, and maybe I'd like to spend a bit of time on VeloPlus.
Could you clarify that volume share for...
Speaker Change: Vilo was was 10% in the latest reading and and what would that number be for I guess just fellow And and maybe if you could share some
Speaker Change: insights into where are we on distribution for this product? Where do we expect it to go? Where are we on capacity? And I'd like to get your view on how you view moist and, I guess, wet pouches versus the existing dry offerings.
Speaker Change: in the U.S. What type of consumers is it attracting and do you think the U.S. consumer is willing to switch from dry to wet?
Speaker Change: OK, so out of the above 10%, slightly above 10% that I was referring from the latest reading, below plus accounts for something close to 7%, 7% of this number.
Speaker Change: which in New York, we are getting close now to 20% reading when you consider both the Villa Plus and the previous one.
Speaker Change: and obviously the biggest feature of Velo Plus is the moisture.
Speaker Change: and we see that this resonates with all types of consumers because we are using higher moisture outside the U.S.
Speaker Change: in markets where we have traditional oral, i.e. consumers coming from snus and some other oral products and consumers that are coming from cigarettes or vapors.
Speaker Change: So, moisture is a key feature and is the main driver behind that. We have now established our presence around 75,000 outlets in the US, and we plan to get to 110 outlets from April, actually, which is the second quarter of the year.
Speaker Change: Brilliant, that's super clear. And then one question, I guess probably a clarification. I do want to go back to Bangladesh.
So, why is Bangladesh...
Speaker Change: different? Why are you anticipating profits to decline in that market with this price increase?
Speaker Change: So what happened is that the government, in the pressure to raise tax collection, they decided to do an ad hoc increase.
Speaker Change: Not just in cigarettes, but they increased VAT and duties over 100 products including cigarettes And then the next specific exercise increasing all tier points including the above inflation the floor price
Speaker Change: and we have to increase across the board the price of cigarettes to cope with those exercise increase.
Speaker Change: Now this is most of the 1% impact. There is also the Australia case that we highlighted.
Speaker Change: But what we saw, and the Pakistan is a good example, when geographies go too far in terms of exercise shocks
Speaker Change: they will reflect that this is counter-intuitive in terms of their desire to increase...
tax collection, because what happens is exactly the opposite.
Speaker Change: in the second year after the establishment of an illegal market.
Speaker Change: government trying to mitigate and take some actions to avoid this to happening.
Speaker Change: And this is our working assumption for 2026, that we'll be lapping in 2025 and not getting even further the impact in 2026.
Speaker Change: related to that, because the government in Bangladesh, 10% of overall tax collection is coming from tobacco.
Speaker Change: which means that they are very reliant on that. They cannot afford to see the spread of illegal markets across different years. And that's where we talk about the lapping in 2025.
Thanks Tadeu, I appreciate that.
Speaker Change: Thank you very much for your questions, Mr. Bigg. We'll now move to Rashad Cowan of Morgan Stanley. Please go ahead. The line is open, sir.
Rashad Cowan: Hey, good morning, guys. Thank you for taking my questions. Two for me, please.
Rashad Cowan: First one, I know it's still relatively early, but you reiterated your getting to your midterm guide by 2026. I guess what gives you confidence in being able to achieve that? How much of an improvement does that assume in U.S. combustibles volumes and enforcement and illicit vapes?
And then, second question...
Rashad Cowan: Talked about sustainable buybacks again today and again as you think about 2026 should we assume buybacks will continue irrespective of
Rashad Cowan: The Canadian settlement. I know you obviously have some flex from the ITC hotel stake But potentially could you also look to monetize more of the ITC stake there to fund future buybacks?
Soraya Benchikh: I guess just any thoughts around how that fits within your capital allocation priorities would be helpful. Thank you. Okay, thank you for the question. I'm going to leave Soraya to talk about the capital allocation question. On the 2026
Soraya Benchikh: Well, we just spoke about Bangladesh, which accounts for most of the 1 percent. The underlying revenue growth of 2025 would have been around 2 percent, which is pretty much in line with what we have in mind in this journey towards our midterm algorithm in 2026.
Soraya Benchikh: So like I just explained with our question, we believe that we'll be lapping that in 2025.
Soraya Benchikh: And the other point is, obviously, we have invested into a completely reshuffle of our innovation ecosystem during 2024. And the reason why we call 2025 a deployment year is that throughout the year, we'll be
launching these new initiatives.
Soraya Benchikh: Glow Helo, for example, is a very different product than the one that we have currently. So we will increase substantially our competitiveness in tobacco heating products.
Soraya Benchikh: Velo Plus in the U.S. now complements already a very successful and winning product that we have outside the U.S.
Soraya Benchikh: in the fastest-growing new category in the world today, which is modern oil.
It's growing incidence and growing everyday consumption everywhere.
Soraya Benchikh: that we launched this product and we are clearly a leader in that space.
Soraya Benchikh: and also Vapor, we will be working in terms of creating a premium subcategory within Vapor with our new products. So, when you come to 2026, you will have all these products already in the market.
Soraya Benchikh: So, we'll have a full year benefit of those products that will come throughout 2025. So, that's another reason. And the U.S., we expect to see a more supportive macroeconomic environment that will resonate better in terms of low-income consumers that has been impacted heavily over the last few years with very high levels of inflation, interest rates.
Soraya Benchikh: So we expect throughout 2025 to see those macroeconomies be more supportive for the low income.
and we really believe that the new administration will...
Soraya Benchikh: will try to address a massive problem that we have today in the U.S. which is the
Soraya Benchikh: the proliferation of illegal vapor products that today account for more than 7% of the total vapor market in the U.S.
Soraya Benchikh: because this is not really benefiting anyone, it's not benefiting the U.S. consumers that is not being...
Soraya Benchikh: having access to latest innovative smokeless products is not benefiting states that could have been collecting tax.
Soraya Benchikh: It's not benefiting consumers that don't have access to high quality products that nobody knows exactly what is in those products and illegal players because we don't have a level playing field. So, I do believe that. Now, obviously, how much of those improvements, that's why we put the range.
Soraya Benchikh: between 3 to 5 revenue, 4 to 6 operating properties, exactly to cope with those ranges. If it's going beyond our expectation, we'll be more in the high end of the range. If it's less of our expectation, we'll be in the lower end of the range. But we'll know more of that as we go along in 2025.
Speaker Change: Can I just make an addition, Tadeu referred to the revenue impact on 2025, so...
Speaker Change: 1% from Bangladesh and Australia, whereas on APFO there is a 2% impact, so if you think about that in terms of our 1.5-2% guidance, then on an underlying basis it would be 3.5-4.5%.
Okay, just taking your question on sustainable buybacks in 2026.
Speaker Change: As Tadeu mentioned, we will be back to our 3 to 5, 4 to 6 growth algorithm in 2026. And as I mentioned earlier in the presentation, excluding Canada takes us to a leverage of 2.75 times.
Speaker Change: So, looking in terms of capital allocation in 2026, we will aim to get back into our leveraged corridor of 2 to 2.5.
Speaker Change: and we will continue to balance cash returns between basically our progressive dividend policy we announced 2% this year and we will continue with this policy because having met a lot of our shareholders I know how much they value the dividends
Speaker Change: but we will also look at, we will be generating enough cash, I think I mentioned in the CMD, we, once we reach our mid-term algorithm, we'll be generating around 8 billion pounds of cash per annum.
Speaker Change: So we'll have sufficient to be able to balance the progressive dividend policy with a sustainable share buyback.
Thank you very much. Very clear.
Thank you, sir.
Moderator: We will now move to Gaurav Jain of Barclays. Please go ahead.
Hi, good morning.
Gaurav Jain: Tadeu, good morning. Soraya, three questions from me as well. So one is, you know, on the ITC hotel stake, you know, you own directly 15%, I think, of that company. What would be your plans for that?
OK, as I have referred to in the past, Gaurav,
Gaurav Jain: BAT has no interest to become a long-term shareholder of a hotel chain in India.
Gaurav Jain: And as a consequence, in the right moment, that will be decided where is the best moment to maximize shareholder value.
Gaurav Jain: We will be divesting and we will be using proceeds to make sure that we get to the leveraged corridor of 2.5 and 2 by 2026.
Speaker Change: Sure, thank you. The second is, you know, just on heated tobacco and I hear the comments that, you know, there's a new platform getting launched this year. But, you know, I mean, I know there was a, you know, divestiture of Russia and Ukraine, which has impacted reported numbers the way we see it. But if we just look at
Speaker Change: You know, Apnea number six largely in Japan and Korea. It is like a slag, when competitors are clearly grown much, much higher. So do you believe that you will be able to accelerate this growth to, you know, in line with market growth?
system there, which is a super slim product.
and this system got completely replaced by Glow Hyper basically.
Speaker Change: And we actually increased price in order to accelerate this migration from the super-slim to the demi-slim, which is the whole global hyper.
Speaker Change: As a consequence, you haven't seen much difference in terms of the volumes, the revenue increase.
Speaker Change: But at the end, we know that Glow Hyper Pro is a much more attractive platform than the previous Super Slim that we used to have.
Speaker Change: They have a higher retention, they have average daily consumption which is higher.
Speaker Change: and resonates in terms of brand attributes with consumers in a much better way than the previous one.
Speaker Change: So, that's basically the story in Japan in 2024 in Hyper, and this has impacted the whole region's performance, because most of the HP in the region is coming from Japan. And obviously, with the Glow Halo, as we said, this is not happening until the middle of the year.
Speaker Change: But in the second half of the year, we expect to complement the offer that we have today with a much more improved and our expectation is that we're going to be in a much better position to make more better inroads in terms of category share of the tobacco heating products.
Speaker Change: Sure. And my last question is on the US. So, you know, this year, you have 524 year revenues declined three and a half percent.
Speaker Change: and you know your cigarette, volume is down ten. Your Avenue is down four. So your price clearly lags what the industry leader there was taking. But when you are saying that supporters five years of need will be flat?
Speaker Change: It's more or less that now the pricing on combustibles will start aligning with the industry leader. Is that how I should think about it?
Speaker Change: Well, we cannot talk about pricing, Gaurav, but like I said before, we'll be lapping a weaker comparator because we had to do the investments that we referred to and we had to ladder the brands to make it more...
Speaker Change: adapted to the reality of the U.S. consumer and this all has an implication in terms of the top line of the company. But the important thing is that all these initiatives now have been concluded and then we start in 2025 with a different dynamic.
Thank you so much.
Thank you, Mr. Jane.
Speaker Change: We will now move to Ray Bume of AnchorSB. Please go ahead.
Ray Bume: G'day Tadeu and Soraya. I just want to maybe just quickly just focus on the Canadian situation.
Speaker Change: First question, I just want to know whether the annual settlements that will come through, and I appreciate this a bit early, but will those be tax-deductible for ITCAN?
Sure.
Currently, I mean, it's only a proposed plan.
Speaker Change: I'm sure you can appreciate the scale and complexity of the settlement, but our current early interpretation is that they will be tax-deductible. But obviously we'll get further clarification once the settlement is done.
Speaker Change: Good. Now, the other interesting question that I have is the total settlement amount of $32 billion Canadian dollars obviously needs to be, you know, paid over the years through profits.
Speaker Change: Is there a minimum liability that you face? Let's say, for instance, the cigarette industry declines at such a rapid rate that Canada goes smoke-free, let's say, after 10 years, and the total payments, let's say,
Speaker Change: have amassed to about $20 billion Canadian dollars. Is there a top-up that you will need to do, let's say, industry-wise, for the other $12 billion, for instance?
Speaker Change: There is no minimum liability. The provision that we've made in the accounts this year of 6.2 billion is basically split into two amounts
The 3.7 billion is obviously our estimate of the liability.
Speaker Change: and 2.5 billion as the current cash that we hold. But obviously, depending on the evolution of the industry, that's what will be paid out. But this is our best estimate as the 3.7 billion, obviously on a discounted basis.
Thank you. Thank you.
Speaker Change: Excellent. And have you sort of finalised what your share will be of these payments, you know, between the main industry players? As I said, it's our current estimate and the next step...
Soraya Benchikh
Speaker Change: it's our current estimate of what the liability would be and the next milestones in the case is by the 3rd of March
Speaker Change: The judge needs to either approve the plan or we're back into negotiation and then we have a 21-day window For appeal where the judge needs to approve the basis for the appeal. That's basically the next steps
But under IFRS, you can't do that.
Sorry, go ahead.
Speaker Change: Yeah, I'd just like to quickly stop the situation in Australia, you know that the market has declined at a material rate in recent years.
Speaker Change: I mean, I think, you know, based on what your competitor says, the market was like basically five billion sticks in 2024.
Speaker Change: I just want to know, Atul, is Australia still profitable for you and how long can you continue to operate in such a diminishing market until you maybe decide also to exit that market?
Speaker Change: Yeah, look, it's clearly a new thought policy, you know, that we are seeing in real life.
Speaker Change: What are the counts that you can find this type of very, very extreme case?
Speaker Change: and we hope that this will be, at a certain point, recognized.
Speaker Change: by the authorities and they can make something about that. Because at the end of the day, it's not just about tax collection that's reduced dramatically, but also we note that these illegal activities always come together with other criminal activities.
Speaker Change: And on top of that, for example, what's happening in vaporware, basically 100% is illegal. You lose completely control in terms of access to youth.
Speaker Change: in terms of what consumers are consuming because these products are completely with a very doubtful type of quality standards.
Speaker Change: So, we hope that the government will wake up for that and take some action related to that. And that's the reason why we are still...
Speaker Change: Five, but the reality is that we are in the hope that these things can change as soon as they can understand what is the reality is.
Okay, thank you very much.
Thank you for your question, sir.
Speaker Change: We'll now move to Damian McNeela of Deutsche Numis. Please go ahead.
Damian McNeela: Hi, good morning Tadeu, good morning Soraya. I know we've had a couple of questions already on the US but I just wanted to clarify because I think some of the things that need to go better for you in the US are a function of
Damian McNeela: but at the top end of the range that would benefit from things that are outside of your control is the first question. Second question is on can you provide any
Speaker Change: quantitative or qualitative data around what drove the improvement in new category profit contribution in the period by sort of subcategory, please, they're my two questions.
Yeah, thank you, Peter. Look, the first question is...
Speaker Change: It doesn't work precisely like that, but I was trying to articulate in line with what you are just describing.
and uh...
Our numbers in 2026 will be...
Speaker Change: you know, easily within the range or at the top of the range if we see a proper meaningful enforcement on the vapor business, for example, and improvement in the macroeconomics.
Speaker Change: But, like I said, we are already expecting 2025 for the U.S. to be turning the corner into a more supportive business for the rest of BAT.
Speaker Change: So, we believe that we can deliver the range of 3 to 5, 4 to 6 in 26.
Speaker Change: And we expect that if we are surprised for better enforcement, better macroeconomics than we have in our plans, that we actually could be more in the upper side of the range.
In terms of the improvement on the new category, profitability,
Speaker Change: If we look at the main drivers, firstly we've supported the top line with RGM.
Speaker Change: going forward and also we've been able to optimize our cost of sales by driving scale and as a result you'll see in the results that we've actually accreted our gross margin and new categories by 500 basis points.
Speaker Change: Further down, getting to contribution, we've also been able to work on our return on investment by focusing on the largest profit pools, so reallocation of resources on the largest profit pools, but also we've been driving the
throughout the business, across all the business units.
dashboards with data analytics to support decision-making.
Speaker Change: and a marketing spend effectiveness program which we've begun to roll out and hopefully throughout this year will roll.
Speaker Change: roll out throughout the group and that's really been supporting the delivery and contribution. As you will have seen, we've delivered over 250 million pounds in category contribution. We're up to seven percent.
Speaker Change: there's a lot more to come. We'll continue on this trajectory enhancing contribution. I had to highlight some of the categories. I think in HP and tobacco heating products
Speaker Change: We drove particularly a better contribution there through RGM, as I said, supporting the top line and taking some pricing but also reducing losses on devices and benefiting from scale.
Speaker Change: Modern oral as you know is a highly profitable category and vaping we continue to work on the profitability by focusing on the premium side of vaping whilst we roll out our innovations going forward.
www.able.co.nz Copyright Able 2013
Very clear, thank you very much.
Thank you, Damien.
Speaker Change: Ladies and gentlemen, today's last audio question or people to have dialed in from their phone will be coming from Richard Felton of Goldman Sachs. Please go ahead.
Speaker Change: Second question, is there anything on your guidance in terms of phasing that you can call out? I know in the statement you say second half weighted, but is there any quantification that you can provide around that? And then the third one, apologies if I've missed it, but
Speaker Change: Remind us what the new tobacco regulation actually is in Australia. Thank you
OK.
Speaker Change: Illicit vapor category, the biggest problems that we are facing nowadays in terms of, even though because of the size of the vapor market, is basically US and Canada.
Speaker Change: Canada, remember that Quebec has announced the ban on all flavors other than tobacco, but without any enforcement. And then the following day...
Speaker Change: It's exactly the same situation that you see in the U.S. All these illegal products coming in with all the flavors back to the markets and...
You know, thousands of perfs and...
Speaker Change: with a completely uncontrolled in terms of the quality of the products that are being sold.
Speaker Change: But these are, I would say, the biggest two. Obviously, we have situations where things are much more under control. Go to France, for example. Vapor is sold under tabaconists. It's a more controlled environment because you have a retail license. That's why...
Speaker Change: In the discussions we are having, it's happening here in the UK, we are a very strong advocate for a retail license, and hopefully the government will do something about that in the final act related to that.
Speaker Change: We have a case of New Zealand that has been very well managed, the vapour, and has a very good impact in terms of reduction of incidence of cigarettes and much more controlled.
Speaker Change: increase of vapors. But we also have cases like Australia that I have just spoken about, which is a hundred percent of illegal, nine percent of consumption of the population, all basically illegal.
Speaker Change: or the lights of Malaysia that also have opened up but without enforcement. The key thing here is not about giving up on the category, even though, because the category is in terms of if you analyze the number of consumers using these smokeless products, vape is by far the largest category.
Speaker Change: and has a lot of potential to convert smokers outside cigarettes and using those that want to carry on using nicotine to a much lesser risk of doing that.
Speaker Change: But this needs to be properly regulated and with proper enforcement.
Speaker Change: And that's why I put a lot of emphasis on OMINI, because we want to provoke this debate.
in the various jurisdictions that we operate.
Speaker Change: and some of them listen to what we say. We have just seen Chile now approving vapor in the marketplace.
starting in a few weeks.
Speaker Change: So, we want to work as much as we can closer to policy holders in order to not lose this opportunity that could have a tremendous positive impact on public health.
Speaker Change: So that's what we see in illicit vapour, obviously a challenge, and our strategy related to move and creating a more premium segment within vapour also has to do with this.
Speaker Change: proliferation of products in some markets where the enforcement is still not present.
In terms of your question of a second half weighted...
Speaker Change: We will see the benefits of all these new launches coming more towards the second half, and there is a lot to do with that. I spoke about Glow Halo. Glow Halo is the first opportunity that BAT has actually to participate in the event.
Speaker Change: in the premium side of the tobacco heating product category and this will be a creative, obviously, for the company but it's all coming in the second half of the year.
Speaker Change: So, the other innovations, we spoke, you know, VeloPlus is doing extremely well, obviously when it comes to the second half they will be more established in the market, so this will also be supportive. So, these are the reasons why we expect.
Speaker Change: Most of the revenue, and going back to the 3 to 5, 4 to 6, is being driven by new categories. Has been the case now for some time in BAT.
Speaker Change: We have spoken about this before. Out of the three, the revenue, combustible needs to give us between zero, flattish.
Speaker Change: to two percent. All the balance will come from the new categories and it's more or less the same when we talk about the APFO line and between one to two to three percent. Most of the difference will come from new categories.
Speaker Change: So, and this is one feature that we'll be seeing more and more moving forward as Nucat becomes more and more relevant in our business.
and the new legislation in Australia.
Speaker Change: It's the highest, it's the biggest change that happened since the plan package was introduced in 2012. Encompasses a number of things, in terms of new health warnings through the STIC.
different pack formats that they have been eliminated.
Speaker Change: for example, and obviously together with the continuation of this ad hoc exercise on top of
Speaker Change: the inflationary excise that happens in the first half of the year. So this is obviously the legal, illegal market, doesn't have any of that.
Speaker Change: And that's one of the reasons why illegal is creeping up big time in Australia.
Speaker Change: Now, just to put, I would like to use this as an opportunity, just to
Speaker Change: to invite you all to have a more holistic view. Because obviously there will always be some problems here and there, but there are a lot of opportunities as well.
Speaker Change: The fact that VAT has the strength of having a multi-geography and multi-category portfolio help us to mitigate some of those pressures that happen in some locations. We saw this all the way back in the COVID.
Speaker Change: where all the other two regions suffered a lot that was supported by the U.S. that did extremely well. More recently, with the U.S. going through an investment phase and all the two regions, like we highlighted today in the 2024 results, stepping up.
Speaker Change: The fact that combustion is going through a hard time and being compensated by the new category. So, this is a dynamic that a company like BAT has all the possibilities to navigate through it.
Speaker Change: and I'm very confident that with all the foundations we created in 1924 and being in transition in 1925, we'll be able to go back to 1926.
Speaker Change: and the beauty, and we spoke about Canada, at a certain stage we would have to have a definition of Canada.
Speaker Change: We could never deconsolidate Canada due to IFRS, we have explained this before. This will be at a certain stage, this would be happening at a certain moment.
Speaker Change: We decided to do this right now in 2025 because we believe that hopefully we are close to a solution that could come in 2025. But the clouds are dissipating.
Speaker Change: So we used to have a U.S. mental band that looks more and more distant.
Speaker Change: U.S. low-nick cap that looks more and more distant. If any time it will come back or not, I have very doubtful on that, because this is in effect a tobacco ban, effectively a tobacco ban in the U.S., which this administration will never agree with that.
We had a lot of doubts about our ability to...
Speaker Change: to make money out of new categories when we have more than a billion of loss in the P&L. Today we have a 7% operating margin in new categories. Just in four years, a swing between 1.1 billion loss to 0.3 million of positives. We have built a leader brand in modern oral.
Speaker Change: in the fastest growing new categories that we have. We have revamped completely our innovation portfolio, have a much more competitive product in tobacco heating product that we start to make a difference from.
from 25 onwards.
Speaker Change: And we also have a very well-established vapor business that if we address the enforcement elements that we were speaking about, this will be putting us in a very leading position to benefit from that. And obviously, the leverage has been a concern, and we have demonstrated that we can leverage the company to the targets that we need.
Speaker Change: So, I would like to invite you to have this holistic view, because I think that this is quite important.
Speaker Change: Thank you, Tadeu. I'm afraid that's all we have time for today. If your questions haven't been answered, then please don't hesitate to contact the IR team and we will help you directly. But I'd like to hand back to Tadeu for some closing remarks.
Tadeu: Thank you all for listening today and for your questions. To close, I'm pleased that we have delivered 2024 results in line with expectations.
Tadeu: While there is still more to do, I am confident the investment actions we have taken are the right way forward for BAT as we build our momentum through 2025 to deliver our medium-term algorithm in 2026.
Tadeu: We will continue to reward our shareholders through strong cash returns, including our progressive dividend and sustainable share buyback, and build on our foundations to deliver long-term growth and value creation. Thank you again for joining us, and I look forward to updating you on our progress at our half-year results.