BAT reports robust first-half volumes

British American Tobacco’s cigarette volume during the six months to the end of June, at 331 billion, was down slightly on that of the six months to the end of June 2013, 332 billion.
Volume was increased in the company’s Asia Pacific region by 4 percent to 104 billion, and increased in its EEMEA (Eastern Europe, the Middle East and Africa) region from 111 billion to 112 billion. But it was down in the Americas from 64 billion to 63 billion, and down in Western Europe by 8.8 percent to 52 billion.
At the same time, the company’s global drive brand volume was increased by 5.7 percent, while the combined market share of these brands were said to have grown strongly in the group’s key markets. Dunhill’s volume increased by 4.9 percent, with growth in Indonesia, Brazil, Romania and South Africa partially offset by an industry decline in Malaysia. Kent’s volume was down by 2.9 percent, mainly due to industry declines in Russia and Romania, partially offset by good growth Japan, Ukraine and the Middle East.
Lucky Strike’s volume was down by 1.9 percent, mainly driven by lower volume in Chile, Poland and Germany, partially offset by higher volumes in Russia, Mexico, Spain and France. Pall Mall’s volume rose by 7.6 percent, with strong growth in Pakistan, South Africa, Argentina, Mexico and Chile partially offset by lower volumes in Russia, the U.K., Italy and Turkey. And Rothmans’ (an addition to the company’s GDBs) volume grew by 32.8 percent, with strong performances in Russia, Italy, Ukraine, the U.K. and South Africa.
Total tobacco volume, which includes other tobacco products converted as cigarette equivalents, was down slightly from 346 billion in the six months to the end of June 2013 to 344 billion during the six moths to the end of June 2014. And within that total, fine-cut volume was down by 1.3 percent to 8.7 billion cigarette equivalents due to market declines in Western Europe, mainly in Spain, Italy and France.
BAT’s revenue during the six months to the end of June, at £6,798 million, was down by 10 percent on that of the six months to the end of June 2013.
Adjusted profit from operations was down by 9 percent to £2,665 million; profit from operations was down by 12 percent to £2,458 million; adjusted diluted earnings per share were down by 7 percent to 101.8 p; and basic earnings per share were down by 12 percent to 93.3 p.
“British American Tobacco performed well during the first half of the year but, as expected, results were affected by the strength of sterling,” CEO, Nicandro Durante, said in reviewing the results.
“We are consistently increasing our market share, driven by the strong growth of our global drive brands.
“Tight control of costs resulted in an improved operating margin.
“We remain confident of high single-digit earnings growth at constant rates of exchange, which we have said we will recognize with an increase in the dividend.”