British American Tobacco PLC (ASX: BTI)

The company has slightly raised its revenue growth forecast for newer alternative products like e-cigarettes but indicated that global sales volume for the traditional cigarette industry this year may fall short of previous expectations.

The stock declined 3.2% in early London trading.

The company stated that while revenue and profit from combustible tobacco products such as cigarettes, cigars, and pipe tobacco in the US market continue to grow, its domestic market share has declined due to intensified industry competition. Additionally, business progress in the Middle East and Africa regions has been slower than anticipated.

The firm, which owns brands like Lucky Strike and Kent, now forecasts that global cigarette industry volume will decline by approximately 2.5% this year, compared to a previous guidance of around a 2% drop.

Concurrently, with revenue acceleration in the non-combustible tobacco market, British American Tobacco has raised its performance expectations for newer tobacco categories such as e-cigarettes and nicotine pouches.

The company now expects its new categories segment to achieve full-year revenue growth in the range of around 15%, up from a prior expectation of low double-digit growth.

Analysts from RBC Capital Markets noted in a research report that combustible tobacco performance remains weak, while the new categories segment is showing impressive growth.

British American Tobacco still anticipates its full-year performance growth to be at the lower end of its medium-term guidance range, with revenue growth of 3%–5% and adjusted operating profit growth of 4%–6%.