22nd Oct 2014 06:23
LONDON (Alliance News) - British American Tobacco PLC Wednesday said revenue in the first nine months of its financial year grew by 2.4% at constant foreign-exchange rates, as it raised its tobacco prices, but said that in sterling terms it was hit hard by the strength of the pound.
The company, one of the world's biggest tobacco companies, said revenue grew at constant rates of exchange as a result of a slightly better price mix, despite increased competitive pricing activity in some of its key markets, in particular Australia and Malaysia, and weaker trading in Western Europe.
"This was driven by good pricing, offset by increased competitive pricing activity and growth in the low price segment in some key markets," the company said in its statement.
However, at reported currency rates, it said it said revenue declined by 9.6%.
"Although currency movements impacted our reported results, the group continues to perform well and we are on track to deliver another year of good earnings growth at constant rates of exchange," said Chief Executive Nicandro Durante in the 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.
In its statement Wednesday, the company said that in the nine months to end of September, it saw strong growth from its so called "global drive brands", with a good market-share performance in several key markets but a 1% decline in cigarette volume from its subsidiaries.
Its so-called "global drive brands" include Dunhill, Kent, Lucky Strike, Pall Mall and Rothmans, and together delivered growth in cigarette volume of 6.2%, driven primarily by its Dunhill brand.
The company said cigarette volume grew in key markets including the Middle East, Venezuela, Pakistan, Ukraine and Indonesia, but was more than offset by lower volume in Russia, Vietnam, Brazil, Poland and Canada, mainly driven by industry declines. Total tobacco volume also was 1.0% lower, it said.
Earlier this year, British American Tobacco suspended its share buy-back programme, due to its planned investment of USD4.7 billion to maintain its existing 42% interest in the enlarged Reynolds American Inc group, following the acquisition of Lorillard Inc by Reynolds in a deal valued at USD27.4 billion.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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