BAT annual profit rises as Velo gains US market share

British American Tobacco (BAT) reported a significant increase in its annual adjusted profit for the 2024 fiscal year during its London headquarters earnings call on Thursday, driven primarily by the rapid expansion of its Velo nicotine pouch brand in the United States. The London-listed tobacco giant outperformed market expectations as it navigates a global shift away from traditional combustible cigarettes toward non-combustible alternatives. This strategic pivot comes at a time when the company faces mounting regulatory pressure on traditional tobacco products while attempting to capture a larger share of the fast-growing oral nicotine category in North America. The financial results highlight a period of transition for the multinational corporation, which has been aggressively marketing its 'New Categories' portfolio to offset declining smoking rates in Western markets. The Velo brand, in particular, has emerged as a cornerstone of BAT's growth strategy, successfully capturing a substantial portion of the U.S. market share from established competitors. This growth in the vapor and oral nicotine segments has provided a necessary cushion for the firm’s balance sheet, allowing it to maintain strong dividend payouts and investor confidence despite the broader challenges facing the tobacco industry. Management emphasized that the profit surge was not solely due to volume growth but also resulted from improved operational efficiencies and premium pricing strategies across its international markets. While the company continues to deal with the long-term write-down of its U.S. cigarette brands, the momentum in its modern oral products suggests a viable path toward long-term sustainability. The 2024 performance underscores BAT's commitment to its 'A Better Tomorrow' initiative, which aims to reduce the health impact of its business by migrating consumers to potentially less harmful products, provided they can navigate the tightening regulatory landscape in the United Kingdom and the United States.