British American Tobacco Q1 Profit Up - Update

Source from:  news.ino.com (RTTNews) 05/08/2008

Wednesday, British American Tobacco Plc (BATS.L, BTI, BTAFF.PK) reported a 20.3% rise in first-quarter profit on higher share of associates and a 14% increase in revenues. The company attributed the revenue growth to favorable exchange, improved pricing, a better product mix and strong regional performances, despite lower volume. Quarterly revenue rose 6% at comparable rates of exchange. The UK-based tobacco products manufacturer's first-quarter profit climbed to GBP 647 million from GBP 538 million in the prior-year quarter. Profit attributable to shareholders equity rose to GBP 599 million or 29.73 pence per share from GBP 495 million or 24.06 pence per share last year. British American noted that the 2008- quarter results included a charge for restructuring of GBP 10 million or 0.40 pence per share, compared to GBP 8 million or 0.25 pence per share in the previous year. The latest quarterly results also included effect of disposal of a business and brands net finance cost adjustment of 0.55 pence per share, and positive effect of associates' brand impairments and termination of joint venture of 2.24 pence per share. On an adjusted basis, the company's first-quarter earnings rose to GBP 573 million from GBP 500 million a year ago. Adjusted earnings per share increased 17% to 28.44 pence from last year's 24.31 pence. In the quarter, the company's share of associates surged 43% to GBP 159 million from GBP 111 million a year ago. Excluding the exceptional items, the company's share of associates increased 3% to GBP 114 million. The contribution from Reynolds American Inc. (RAI), in which British American holds a 42% stake, grew 51% to GBP 109 million. However, excluding the benefit from the termination of a joint venture agreement, contribution from Reynolds American declined 11% to GBP 64 million. According to British American, the benefits from higher cigarette pricing was more than offset by a number of factors that lowered volumes, including higher prices, wholesale inventory shifts and continuing weakness in the US economy. British American's pre-tax profit came in at GBP 871 million, up from GBP 737 million a year ago. Gross turnover in the quarter, including duty, excise and other taxes, were GBP 6.77 billion, higher than GBP 5.82 billion last year. First-quarter revenues rose 14% to GBP 2.54 billion from GBP 2.23 billion last year, driven by favorable exchange, improved pricing and a better product mix. At comparable rates of exchange, quarterly revenue would have increased 6%. On a geographical basis, revenue from Europe, based on location of manufacture, rose to GBP 976 million from GBP 822 million last year. Asia-Pacific revenues went up to GBP 498 million from prior year's GBP 458 million. In the Latin American region, quarterly revenues climbed to GBP 635 million from GBP 556 million a year ago. Africa and Middle East recorded revenues of GBP 314 million, up from last year's GBP 290 million. America-Pacific generated revenues of GBP 118 million from prior year's GBP 106 million. Based on location of sales, the company's quarterly revenues from Europe grew to GBP 929 million from last year's GBP 782 million. Asia-Pacific revenues were GBP 494 million, compared to GBP 448 million in 2007. Latin American revenues grew to GBP 501 million from prior year's GBP 454 million, and revenues from Africa and Middle East rose to GBP 359 million from GBP 336 million a year ago. In the America-Pacific region, revenues increased to GBP 258 million from GBP 212 million a year ago. Among brands, sales of Global Drive Brands grew 23%, with around one third of the rise coming from brand migrations. Dunhill rose 8%, Lucky Strike up 16% and both Kent and Pall Mall increased by some 30%. Group volumes from subsidiaries were 158.4 billion, up 1% from 156.4 billion last year, mainly driven by good performances by the four Global Drive Brands with overall volume growth of 23%. Including associates' volumes for the quarter, total Group volumes were 212.4 billion, lower than 215.5 billion last year. Volume from premium brands improved 6% and now represents 33% of total volume. The company's total profit from operations was GBP 807 million, up 18% from GBP 684 million last year. Adjusted profit from operations rose to GBP 817 million from GBP 692 million a year ago. Commenting on the results, Chairman Jan du Plessis stated, "The year has clearly got off to a great start, with profit growth in all our regions. While the normal caveats about not reading too much into any particular quarter still apply, the Group's unrivalled spread of business between developed and developing markets should continue to serve shareholders well." Among peers, the world's largest tobacco products maker Altria Group, Inc. (MO) in late April reported a more than 10% decline in first-quarter net income, hurt mainly by charges related to spin off of Philip Morris International. The Richmond, Virginia-based company reported net earnings for the first quarter of $2.45 billion or $1.16 per share, lower than $2.75 billion or $1.30 per share last year. Earnings from continuing operations declined 11.8% to $614 million or $0.29 per share from $696 million or $0.33 per share a year ago. Excluding special items, adjusted earnings from continuing operations increased to $779 million or $0.37 per share from $699 million or $0.33 per share last year. Net revenues for the quarter rose 2.4% to $4.4 billion from $4.29 billion in 2007. British American's associate and the second largest tobacco company in the US, Reynolds American Inc. (RAI) posted a sharp growth in its first-quarter profit, boosted by a pre-tax gain from the termination of the Gallaher Joint Venture. The Winston-Salem, North Carolina-based company's first quarter net income jumped 54% to $505 million or $1.71 per share from $328 million or $1.11 per share a year ago. Meanwhile, adjusted net income fell 10% year-over-year to $295 million or $1.00 per share. Quarterly net sales amounted to $2.06 billion, down 4.2% from previous year's sales of $2.15 billion. BATS.L is currently trading at 1,988 pence, up 50 pence or 2.58%, on a 1.2 million share volume. BTI closed Tuesday's regular trading session at $77.92, up $1.13, on a volume of 161 thousand shares. BTAFF.PK settled on Tuesday at $38.50. Enditem