- Price
- $54.40 → $55.50(+2.0%)
- Discount
- 13.7% → 11.9%(−1.7 pts)
- Next earnings is estimate
- Yes → No
- Balance sheet
- Cash: £2.5B
Debt: £35.1B
Net debt: £32.6B
Undrawn credit line: £6.9B
Ratings: Moody's Baa1 (stable outlook), S&P BBB+ (stable outlook), Fitch A- (stable outlook)
British American Tobacco carries a large debt load from the 2017 purchase of Reynolds American. After £2.6 billion of dividends, free cash flow was negative £349 million in H1 2026, so the dividend and the £1.3 billion buyback depend on stronger second-half cash flow. Most of itthe debt is unsecured bonds that central finance companies issue and the parent guarantees. At June 30, 2026, borrowings includingDebt includes leases were £35.1 billion, and net debt was £32.6 billion. Cash was £2.5 billion. But £386 million of itthe cash sits in Canada under the court-approved plan that settles Canadian tobacco claims. The group also carries a long-term provision for payments under that plan. Centrally managed bonds have an average maturity of 9.3 years, and no more than 15.1% matures in any 12-month period. About 75% of the debt is at a fixed rate after swaps. Moody's rates BAT Baa1, S&P rates it BBB+ and Fitch rates it A-, all with a stable outlook. The group also has £1.9 billion of perpetual hybrid bonds that it counts as equity. LiquidityThe undrawn credit is a £5.0 billion undrawn revolving credit facility and £1.9 billion of undrawn bilateral lines. In August 2026, BAT sold $1.5 billion of new US dollar notes due 2033 and 2036. Management targets adjusted net debt of 2.0 to 2.5 times adjusted EBITDA by the end of 2026. After £2.6 billion of dividends, free cash flow was negative £349 million in H1 2026. Thus theThe dividend and the £1.3 billion buyback depend on stronger second-half cash flow. They also leave little room to reduce debt faster.
As of 2026-06-30.
- Checkpoints
- Dec 2026 (estimate): Pre-close trading update: New Category growth and leverage. Pending. Watch: Confirmation of mid-teens New Category revenue growth and leverage inside 2.0 to 2.5 times by year end passes; a guidance cut or a leverage miss fails.
Feb 11, 2027 (estimate): Full-year 2026 results: Velo profit and debt target. Pending. Watch: New Category profit growth that offsets the 2.5% cigarette volume decline and leverage inside the 2.0 to 2.5 times range pass; leverage above 2.5 times or weaker Velo margins fail.
Q2 2027 (estimate): EU nicotine pouch and excise rules. Pending. Watch: EU rules that allow Velo with limits on flavors and moderate taxes pass; a ban or very high pouch excise in large EU markets fails.