British American Tobacco’s cigarette volume during the year to the end of December, at 694 billion, was down by 1.6 per cent on that 2011, 705 billion.
The drop in volume was attributed to industry contractions in Western Europe, Brazil and Egypt, and losses in respect of low value brands in Indonesia and Turkey.
The company’s organic volume was down by 2.0 per cent to 691 billion; or by 1.7 per cent excluding the effect of the Japanese market where foreign manufacturers made volume and shares gains in 2011 following the disruption caused to Japan Tobacco Inc’s manufacturing and distribution operations by the earthquake and tsunami that struck on March 11, 2011.
In BAT’s EEMEA (Eastern Europe, Middle East and Africa) region, volume was down by 0.4 per cent to 235 billion; in its Asia Pacific region, volume was down by 1.6 per cent to 188 billion; in its Americas region, volume was down by 0.7 per cent to 142 billion; and in its Western Europe region, volume was down by 4.4 per cent to 129 billion.
The volume accounted for by the company’s global drive brands grew by three per cent, with Lucky Strike up 11 per cent, Pall Mall up three per cent, Dunhill up two per cent and Kent up one per cent (or four per cent taking out the Japan-market effect).
Global drive brands now account for more than a third of BAT’s volume.
BAT’s reporting of other tobacco products was limited to fine-cut volume in Western Europe, which grew by eight per cent to 14,494 tonnes.
The company’s reported revenue was down by one per cent due to adverse currency movements, while revenue at constant rates of exchange was up by four per cent to £15,999 million.
Reported profits from operations increased by 15 per cent while adjusted profit from operations at constant rates of exchange increased by eight per cent to £5,970 million.
Basic earnings per share were up by 26 per cent to 198.1p, while adjusted diluted earnings per share were up by seven per cent to 207.5p.
BAT’s chief executive, Nicandro Durante, said that BAT had exceeded all of its financial objectives in 2012. (Click here to view a video interview about the 2012 results with Durante.)
“We delivered organic revenue growth on a constant currency basis of four per cent and adjusted profit from operations of eight per cent at constant rates of exchange,” he said. “Despite the adverse exchange rates, once again we delivered excellent returns to shareholders, with adjusted diluted earnings per share up by seven per cent on last year, with an increase of 12% at constant exchange rates.
“We grew our underlying market share in 2012, with good share momentum in the second half of the year. Pricing remains strong and, while our cigarette volumes were down slightly, this was mainly due to industry declines in some of our major markets.”
Turning to next-generation products, Durante said that BAT was developing a portfolio of products.
Nicoventures, a company BAT set up in 2011, was aiming to launch nicotine-based products, and in December BAT had acquired CN Creative, a UK-based company specialising in the development of e-cigarette technologies.