30th Apr 2014 08:07
LONDON (Alliance News) - British American Tobacco PLC Wednesday said that revenue grew slightly at constant exchange rates in the first quarter, but dropped significantly when taking into account currency movements in the quarter.
British American Tobacco, the world's second-largest quoted tobacco group by global market share after Philip Morris International Inc, said it grew revenue by 2% at constant rates of exchange in the first quarter, as pricing remained on track.
BAT said it continued to grow market share on the back of strong growth from its key brands: Dunhill, Kent, Lucky Strike, Pall Mall, and its Rothmans brand.
However, it said that group revenue for the three months to end of March, at current exchange rates, declined by 12%, hit by the current strength of sterling against some of BAT's key revenue-generating currencies, notably the Brazilian real, South African rand, Japanese yen and Australian dollar.
The tobacco giant also said that price increases this year will be weighted towards the second half of the year.
"This, together with transactional exchange rate impacts which, at today's rates, will moderate over the year, means that results will be more skewed to the second half than in previous years," the group said in a statement.
British American Tobacco has been reporting the same story for some time: steady profit growth as it focuses on driving growth of its most profitable brands in Asia and other emerging markets. BAT also is focused on reducing costs and increasing prices. Both efforts are aimed at offsetting continued declines in sales in most developed markets and in overall tobacco sales volumes.
The company said again Wednesday that while emerging market volumes are increasing, the trading environment in Western Europe remains challenging.
Total global tobacco volumes were down 1.1% in the first quarter to 164 billion, as cigarette volumes held up in Asia Pacific, but steadily declined in all other markets including the Americas, Western Europe and Eastern Europe, Middle East and Africa.
BAT's so-called global drive brands - Dunhill, Kent, Lucky Strike, Pall Mall and Rothmans - saw cigarette volume grow by 6.3% during the first quarter. Dunhill volume was up 4.1%, with good growth in Indonesia and Brazil, although this was partially offset by market decline in Malaysia.
Kent volume was up 1.6%, driven by Japan and the Middle East, but partially offset by market decline in Russia. Pall Mall was up by 6.9%, boosted by good growth in emerging markets, while Lucky Strike volume was down by 1%, hit by big declines in Chile, Germany and Poland.
The Rothmans brand, which BAT recently added to its global brands portfolio, grew volume by almost 28%, driven by strong performances in Russia, Italy and Ukraine.
It said fine cut volumes, also known as roll-your-own tobacco, were down 2.9% in the quarter, driven by market declines in Western Europe.
The group resumed an on-market share buy-back programme at the end of February, of which it said during the three months to March 31, 5.4 million shares were bought at a cost of GBP175.0 million, excluding transaction costs.
British American Tobacco shares were down 0.8% at 3,459.00 pence Wednesday morning.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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