BAT’s profit soars

British American Tobacco’s cigarette volume during the six months to the end of June, at 345 billion, was down by 3.1 percent on that of the six months to the end of June 2017 [when the 2017 six-month results were presented, volume was give as 314 billion, which would indicate that volume had increased by about 10 percent, but volume figures for the first half of 2018 have been given on a ‘representative basis’ – as if BAT had owned RAI and other acquisitions, completed in 2017, from 1 January 2017.]
BAT’s tobacco-heating-product (THP) volume, during the six months to the end of June, at 3.3 billion sticks was increased by 855 percent on that of the six months to the end of June 2017; so the company’s combined cigarette and THP volume fell by 2.2 percent to 348.3 billion.
BAT’s oral-tobacco-product volume was up by 1,093 percent to the equivalent of 4.4 billion sticks; its vapor volume, measured in 10 ml units, was up by 160 percent to 77.6 million; and its other-tobacco-product volume, which includes roll-your-own and make-your-own products, was down by 6.9 percent to 10.3 billion stick-equivalents.
BAT’s revenue during the six months to the end of June, at £11,636 million, was said to be up by 56.9 percent on that of the six months to the end of June 2017.
Profit from operations was up by 72.4 percent to £4,438 million, while basic earnings per share were down by 3.4 percent to 117.7p.
In announcing the half-year results, CEO, Nicandro Durante, said the company’s strategy was to continue to grow its combustible business while investing in the ‘exciting’ potentially reduced risk categories of THP, vapor and oral. As the Group expanded its portfolio in these categories, it would continue to drive sustainable growth.
‘In the first six months of 2018, the Group continued to perform well,’ he said. ‘The cigarettes and THP portfolio has outperformed the industry as market share grew 40 basis points (bps) with a tobacco price mix of approximately four percent which is expected to strengthen in the second half of the year.
‘The performance of Reynolds American Inc. (RAI) since acquisition is encouraging and the Group’s diverse NGP portfolio has grown strongly. The foreign exchange impact on the Group’s results was a headwind of eight percent for the first six months of the year and is estimated to be 5-6 percent for the full year, based upon the current foreign exchange rates.
‘Despite the recent slowdown in the THP category in some markets, including Japan and South Korea, we remain confident of exceeding £1 billion of reported revenue in NGP in 2018 as we expect a range of new launches to re-energise growth in THP in the second half of the year.
‘We anticipate another good year of adjusted earnings growth at constant rates of exchange.’