British American Tobacco Earnings up

Source from:  By Dan Lalor Reuters - Thursday, November 1 09:37 amLONDON (Reuters) 11/02/2007

British American Tobacco , the world's second-biggest cigarette maker, beat forecasts with a 10 percent rise in third-quarter earnings, driven by 18 percent growth in its four "global drive" brands. Cazenove, which has an "outperform" rating on BAT stock, said its performance in the year to date underpinned a good outcome for the year. "In our view the (BAT) operating model remains the benchmark for the sector. We may have further scope to upgrade in due course as the company continues to exploit the strength of its brand portfolio and of its balance sheet," Cazenove said. Jan du Plessis, chairman of the maker of Dunhill, Kent, Pall Mall and Lucky Strike cigarettes - BAT's "global drive" brands - said he expected profit growth to slow in the final quarter, as previously indicated, due to generally higher marketing spend and the timing of price increases in Brazil. London-based BAT, the world's No. 2 cigarette maker after Altria , posted adjusted diluted earnings per share of 28.49 pence for the three months to end-September, or up 9 percent to 82.0 pence in the first nine months compared to an analysts' average forecast of 80.6 pence and a range of 80.0 pence to 81.4 pence. BAT targets high single-digit percentage earnings per share growth over the medium term. Its nine-month operating profit rose 19 percent to 2.30 billion pounds. At 9:20 a.m., BAT shares, which outperformed other leading European personal and household goods companies by 9 percent over the past 12 months, were up 0.2 percent at 1,834 pence to value the business at 36.2 billion pounds. BAT said volumes fell 1 percent to 504 billion cigarettes in its first nine months, after 0.7 percent growth in the third quarter and following a 2 percent fall in the first half. At the half-year stage, it said full-year volume growth was likely to be flat compared to the group's long-term 1 percent to 1.5 percent target range, after a 2 percent rise in 2006. A BAT spokesman said on Thursday it still expected flat annual growth, implying a pick-up in growth from the third quarter's 0.7 percent. BAT has an on-going 2007 share buyback of 750 million pounds, of which it has spent 612 million pounds buying 38 million shares at an average of 1,630 pence. Enditem