28th Jul 2016 07:09
LONDON (Alliance News) - British American Tobacco PLC shares rose on Thursday after the company increased its interim dividend despite its profit experiencing a slight dip in the first half of the year after a small lift in revenue was offset by higher costs.
British American Tobacco shares were trading up 1.4% to 4,813.0 pence per share on Thursday.
The tobacco company said pretax profit in the first half of 2016 amounted to GBP3.42 billion compared to the GBP3.49 billion profit reported a year earlier.
Revenue in the half was more than 5.5% higher at GBP21.03 billion from GBP19.90 billion after sales volumes rose by 3.4% to 332.00 billion cigarettes, but the company's margin was squeezed and pushed down the profit from operations to GBP2.21 billion from GBP2.34 billion a year earlier.
That was caused by the 10% year-on-year rise in the cost of raw materials, a 6.0% lift in employee benefit costs, a 6.7% rise in other operating expenses and a minor increase in depreciation and amortisation costs.
The interim dividend for the first half was increased by 4.0% to 51.3 pence from 49.4 pence.
British American Tobacco Chairman Richard Burrows said profit growth will be weighted to the second half of the year, giving him confidence that the company can deliver "another year of good earnings growth at constant rates of exchange".
By Joshua Warner; [email protected]; @JoshAlliance
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