Financial Data and Key Metrics Changes - Group revenue grew by 1.3% in 2024, with new category revenue increasing by 8.9% and adjusted operating profit rising by 1.4% [16][90] - Diluted EPS increased by 3.6%, supported by lower net finance costs and share count, despite a reduced share of ITC profits and tax [37][111] - Adjusted gross profit expanded by GBP400 million, driven by revenue growth management and new category scale benefits [91] Business Line Data and Key Metrics Changes - Smokeless products accounted for 17.5% of group revenue, up 1 percentage point from the previous year, with 3.6 million new smokeless consumers added [4][82] - Vapor revenue fell by 2.5%, impacted by illicit market challenges, while heated products saw Glo revenue increase by nearly 6% [20][97] - Modern Oral revenue grew by 53% in 2024, with significant growth across all regions and a 130 basis point increase in category share [100][101] Market Data and Key Metrics Changes - U.S. revenue declined by 3.4%, primarily due to commercial actions taken over the last 18 months, with the combustibles industry declining by around 9% [29][104] - In AME, revenue grew nearly 5%, driven by higher combustibles revenue and double-digit new category growth, particularly in Modern Oral [106] - APMEA saw total revenue grow by 5.4%, with combustibles up 3.5%, supported by pricing gains despite declines in Australia and supply chain disruptions in Sudan [107] Company Strategy and Development Direction - The company aims for 3% to 5% revenue growth and 4% to 6% adjusted profit from operations (APFO) growth by 2026, focusing on quality growth and innovation [12][75] - A commitment to return cash to shareholders through sustainable share buybacks and progressive dividends was emphasized, alongside a focus on financial flexibility [9][83] - The company is enhancing its innovation ecosystem and expanding its product portfolio to compete effectively in the premium segment [52][56] Management's Comments on Operating Environment and Future Outlook - Management acknowledged significant headwinds in Bangladesh and Australia due to increased taxes and regulations, which are expected to impact 2025 revenue growth [43][120] - The company remains optimistic about its U.S. business recovery and expects to see improvements in financial performance despite ongoing macroeconomic pressures [31][75] - Management highlighted the importance of regulatory enforcement against illicit products to support the legal market and improve overall performance [64][66] Other Important Information - The company achieved close to GBP900 million in cost savings over the last two years and is on track to deliver more than GBP1.2 billion by year-end [35][109] - A GBP6.2 billion provision was recognized in the 2024 results related to the proposed CCAA settlement in Canada, which will affect future reporting [39][114] - The company expects to generate over GBP50 billion of free cash flow between 2024 and 2030, supporting its transformation and capital allocation priorities [42][116] Q&A Session Summary Question: What are the expectations for revenue growth in 2025? - The company anticipates around 1% revenue growth in 2025, impacted by headwinds in Bangladesh and Australia, with APFO growth expected to be between 1.5% to 2.5% adjusted for Canada [47][120] Question: How is the company addressing the challenges in the U.S. market? - Management noted that the U.S. financial performance improved throughout the year, driven by strong performance in combustibles, and emphasized the importance of regulatory enforcement against illicit products [31][63] Question: What is the outlook for new category growth? - The company expects continued strong growth from new categories, particularly Modern Oral, and plans to roll out exciting innovations throughout 2025 [48][75]
BAT(BTI) - 2024 Q4 - Earnings Call Transcript