28th Feb 2019 07:47
LONDON (Alliance News) - British American Tobacco PLC on Thursday said annual profit shrank considerably as a result of its acquisition of Reynolds American Inc the year before.
The dual-listed tobacco firm posted a pretax profit of GBP8.35 billion, less than a third of its GBP29.59 billion profit in 2017.
This came after the company's share of results from associates and joint ventures shrank to just GBP419 million from GBP24.21 billion following the acquisition of Reynolds American in 2017, which is now reported as a wholly-owned subsidiary.
BAT recognised a gain of GBP23.29 billion in 2017 arising from the Reynolds American acquisition since it was deemed to have disposed of the firm as an associate, and did not recognise such a gain in 2018.
Revenue for the year was GBP24.49 billion, a rise of 25% from GBP19.56 billion in 2017. Deutsche Bank was forecasting revenue of GBP24.22 billion.
The company declared a dividend of 203.0 pence per share, up 4% from 195.2p in 2017. According to broker AJ Bell, analysts had forecast a dividend of 200.25p.
The US Food & Drug Administration has proposed a ban of menthol cigarettes, which the company noted had created "increased uncertainty in the US operating environment".
BAT Chief Executive Nicandro Durante said: "We recognise that the proposed potential regulatory changes in the US have created some investor uncertainty. We have a long experience of managing regulatory developments, a track record of delivering strong growth while investing for the future and an established multi-category approach.
"Looking into 2019 we are confident of another year of high single figure adjusted constant currency earnings growth and this confidence is reflected in our board's proposal to increase the dividend by 4%."
BAT also announced it will promote Group Transformation Director Tadeu Marroco to deputy finance director when current finance director, Ben Stevens, departs on August 5. Stevens has been with the company for 30 years and has held the finance director role for 11 years.
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