Group sales by volume fell three per cent during 2010, though price rises more than offset the decline to deliver a five per cent revenue rise to £14.9bn, BAT said in its annual report.
The firm said the “denormalisation” of smoking caused by increasing regulation is likely to continue hitting growth, though BAT’s market share has increased in several areas.
A rise in illicit tobacco trade – now making up 12 per cent of sales by volume according to BAT – has also impacted on sales.
However, the firm will restart a £750m share buyback this year as it is confident that the recovering global economy will bring in revenues.
Paul Adams, who was chief executive until 28 February, made a total of £4.1m in 2010, taking home a £2.2m bonus alongside a £1.27m salary as well as other long-term benefits.
New chief Nicandro Durante made £2.4m last year, when he served as chief operating officer.
Outside the US, the firm is fighting more than 500 lawsuits linked to medical problems.