BAT Gains From Price Hikes to Offset Volume Fall

Source from:  Reuters 10/27/2011

LONDON (Reuters) - British American Tobacco , the world's second-biggest cigarette maker, increased its sales by 7 percent in the first nine months of the year after raising prices to offset a decline in overall demand. The London-based maker of Kent, Dunhill, Lucky Strike (Other OTC: LCKY.PK - news) and Pall Mall cigarettes said price rises, good performances from these top four brands together with the weak pound would help it see "another year of good earnings growth." The group reported underlying cigarette volumes were down 0.4 percent, slightly better than a 1 percent fall in the first six months of 2011. "While the challenging economic conditions continue to impact consumers in some markets, other markets are showing signs of recovery," said Chief Executive Nicandro Durante in a nine-month trading update. Overall group volumes fell 0.6 percent to 523 billion cigarette in the first nine months, but its key four top brands saw volumes rise 8 percent. The world's biggest cigarette group Marlboro-maker Philip Morris International last week reported underlying third quarter volumes rose 4.4 percent with sales up 15.7 percent, while Imperial Tobacco (LSE: IMT.L - news) expects its cigarette volumes to fall 2 percent for its year to end-September. BAT shares have outperformed the FTSE 100 (Euronext: VFTSE.NX - news) by around 24 percent and European food and beverage stocks by 17 percent since the start of 2011. They closed at 2,852-1/2 pence on Tuesday. Enditem