BAT's Volume Holds Steady in First Half

Source from:  Tobacco Reporter 07/26/2012

British American Tobacco's cigarette volume during the six months to the end of June, at 344 billion, was unchanged from that of the first half of 2011. Its EEMEA (Eastern Europe, Middle East and Africa) region volume was increased by 1.7 per cent to 116 billion; its Americas volume was up by 1.4 per cent to 71 billion; its Asia Pacific volume was unchanged at 95 billion; but its Western Europe volume was down by 4.6 per cent to 62 billion. Organic volume during the first half of this year, which excludes volume contributed by Protabaco, Colombia, was 0.6 per cent lower than it was during the first six months of 2011. BAT pointed out that the first half 2012 performance had to be set against a background of contracting industry volumes in some markets, notably in Southern Europe, and against a comparator period in which it was able to ship additional volume because of the disruption caused to Japan Tobacco Inc's manufacturing and distribution operations by the earthquake and tsunami that struck Japan in March last year. This last point is perhaps illustrated in BAT's performance during the three months to the end of June. Volume during that period, at 178 billion, was down by 1.1 per cent on that of the three months to the end of June 2011, and volume in its Asia Pacific region was down by 2.0 per cent to 50 billion. BAT reported that, during the first half of this year, its four global drive brands achieved volume growth of four per cent following the successful geographic roll-out of a number of innovations. This growth would have been six per cent if the one-off benefit of the additional sales in Japan last year were excluded. Dunhill's volume was increased by three per cent with growth in Malaysia, Indonesia, the Gulf Co-operation Council states, South Africa, Nigeria and Romania, partially offset by a decline in South Korea. Kent's volume was two per cent higher, with higher sales in Russia, Ukraine and Switzerland, undermined by declines in Uzbekistan and Chile, as well as the high comparator in Japan. Lucky Strike's 19 per cent growth was driven by increased volumes in Germany, Spain, France, Poland, Argentina, Chile and Brazil, partially offset by lower volumes in Italy and Japan. Pall Mall's volume rose by three per cent with strong growth in Pakistan, Romania, Russia, Taiwan and Canada, partially offset by lower sales in Chile, Italy and Spain. The group’s cigarette market share in its top 40 markets, excluding the impact of Japan, was said to be essentially flat compared to its full-year 2011 share, but showing a growing trend. Its share of the premium segment continued to improve. BAT's other tobacco products performed well with a growth of seven per cent to 6,954 tonnes in fine-cut in Western Europe, mainly in Germany, Hungary, the Netherlands and the UK. Market share was said to have grown strongly and profit was reported to be have been higher. BAT made the point that Pall Mall was by far the largest fine-cut brand in Western Europe. Meanwhile, BAT's revenue during the six months to the end of June, at ￡7,452 million, was up slightly from that of the first half of last year, ￡7,438 million. Adjusted profit from operations was up by three per cent to ￡2,839 million, while profit from operations was up by two per cent to ￡2,740 million. Adjusted diluted earnings per share were up by seven per cent to 102.4p, while basic earnings per share were up by five per cent to 98.9p. The interim dividend per share was up by 11 per cent to 42.2p. "Despite the global economic uncertainty and the adverse impact of exchange rates, British American Tobacco has delivered another good set of results," said chairman, Richard Burrows. "The underlying business continues to perform well and we are confident of another year of good earnings growth." Enditem