BAT Profit Lifted by Finance Income
February 25 2016 - 4:50AM
Dow Jones News
LONDON—British American Tobacco PLC on Thursday reported strong
profit growth for the year after the tobacco group was helped by
strong finance income and improved profits from associates.
BAT reported a profit of £ 4.29 billion ($5.97 billion) for 2015
compared with £ 3.12 billion a year earlier. Revenue fell 6.2% to £
13.1 billion due to currency fluctuations, but climbed 5.4% on a
constant currency basis.
The maker of Lucky Strike and Dunhill cigarettes among others
said sales volumes declined 0.5% compared with a fall of 1.4% a
year earlier.
BAT's operating margin succumbed to currency headwinds, falling
by 60 basis points to 38.1%, disappointing some analysts and
sending shares down 1% in morning trading in London.
The company said it has informed the U.K.'s serious fraud office
that is has appointed an external law firm to conduct a "full
investigation" and into a story published late last year by the
British Broadcasting Corporation that alleged that BAT bribed
politicians and civil servants in East Africa. At the time, the
company said it denies "the suggestion that this is how BAT
operates around the world."
The company struck an upbeat tone on the current year, saying
that despite a "challenging" trading environment, it believes the
business "is well placed."
BAT posted finance income £ 62 million for 2015 compared with
costs of £ 417 million in 2014 due to a gain tied to its investment
in Reynolds American Inc. In 2014 BAT agreed to pay $4.7 billion to
maintain its existing 42% stake in Reynolds after the American
company decided to buy Lorillard Inc.
BAT on Thursday said it had logged a gain of $931 million (£ 601
million), reflecting the difference between the fixed price paid to
Reynolds and the market value of Reynolds shares on the day of the
transaction after the contract was fair valued.
BAT's share of posttax results of associates and joint ventures
climbed to £ 1.24 billion from £ 719 million a year earlier.
BAT said it would continue to explore products for the growing
e-cigarette market. In November, BAT began tests of a hybrid
tobacco based vapor product called iFuse, which combines
e-cigarette and tobacco technology. The company on Thursday said
its ambition is to "lead the category world-wide."
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
(END) Dow Jones Newswires
February 25, 2016 04:35 ET (09:35 GMT)
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