British American Tobacco cuts 5,500 jobs and grows only 2.9 percent

British American Tobacco has reported revenue growth of 2.9 percent for the first half of 2026. Earnings per share rose 7.9 percent. A restructuring programme is running in parallel that costs 5,500 jobs and is meant to save 600 million pounds a year by 2028.

The figures for the six months to 30 June were presented on 30 July. Chief executive Tadeu Marroco and interim finance chief Javed Iqbal set them out.

The gap between the two growth rates is the core of the story. Revenue growth of 2.9 percent alongside earnings growth of 7.9 percent means that a considerable part of the profit increase does not come from additional business but from cost cuts and from a lower share count.

The short version

• Revenue rose 2.9 percent in the first half of 2026 and earnings per share rose 7.9 percent.
• A restructuring programme costs 5,500 jobs and is meant to save 600 million pounds a year by 2028.
• The new smokeless product categories grew 18 percent, and interest cover stands at 6.42.

Smokeless products grow 18 percent

The growth driver sits outside the cigarette. The new product categories rose 18 percent.

Three areas belong to that group. Vapour products, heated products with a battery powered device and a plant based insert, and modern oral products such as nicotine pouches. The most important brands in this field are Velo and Vuse.

For the group this shift is a question of survival. The classic cigarette business has been shrinking in most developed markets for years. The brands Kent, Dunhill, Lucky Strike and Pall Mall belong to that area.

The company reports in three geographic segments. The United States, then the Americas and Europe combined, and Asia and the Pacific together with the Middle East and Africa.

Interest cover at 6.42

One figure analysts check regularly at this group is interest cover. It stands at 6.42 and shows how many times operating profit covers interest expense.

At heavily indebted companies this measure says more than the absolute level of debt. A value above six counts as comfortable. It shows that the interest burden can be serviced from the running business without difficulty.

For tobacco groups that matters because they traditionally pay out a great deal and finance part of it with borrowed money. In one overview of German dividend stocks a tobacco group stood at the top at the end of July 2026 with a yield of around 5.9 percent. Among professionals such top values count as a warning sign, because they often mean the market credits the business with little growth.

Analysts disagree

The assessments diverge. RBC Capital raised its price target to 3,800 pence on 11 August but kept a sell recommendation. Barclays confirmed its buy recommendation a day earlier.

That combination of a higher price target and a sell rating looks contradictory but is not. A price target describes where an analyst expects the price. The rating describes whether the analyst considers the paper attractive compared with others. If the market as a whole rises more than the price target, both can be true at once.

At the start of August the group also reorganised its leadership in marketing and in the region of Asia, the Pacific, the Middle East and Africa.

Competitors include Philip Morris International, Altria and Japan Tobacco. The group was founded in 1902 and has its seat in London.

Frequently asked questions

Why do earnings grow faster than revenue

Revenue growth of 2.9 percent alongside earnings growth of 7.9 percent means that a considerable part of the profit increase does not come from additional business but from cost cuts and from a lower share count.

What counts as a smokeless product

Three areas. Vapour products, heated products with a battery powered device and a plant based insert, and modern oral products such as nicotine pouches. The most important brands in this field are Velo and Vuse.

What does interest cover of 6.42 tell us

It shows how many times operating profit covers interest expense. A value above six counts as comfortable and shows that the interest burden can be serviced from the running business without difficulty. At heavily indebted companies this measure says more than the absolute level of debt.

This analysis is for information only and is not investment advice.