BAT Sees Year of Good Earnings Growth
July 28 2016 - 5:10AM
Dow Jones News
LONDON--British American Tobacco PLC predicted a year of good
earnings growth after first-half profit climbed despite currency
volatility as the tobacco giant was helped by strong results from
associates and joint ventures.
Shares climbed 1.6% to £ 48.24 in early trading in London on
Thursday.
The owner of Dunhill, Lucky Strike and Pall Mall brand
cigarettes said net profit during the six months ended June 30 rose
1% to £ 2.67 billion ($3.51 billion). Adjusted operating profit
dropped 2.2% but the company benefited from an 81% rise in its
share of post-tax results from associates and joint ventures.
The cigarette maker indicated that it is on track for a strong
year. "With profit growth weighted to the second half of the year,
we remain confident that we will deliver another year of good
earnings growth at constant rates of exchange," said Chairman
Richard Burrows.
BAT maintains a 42% stake in Reynolds American Inc. and the
American company accounts for a chunk of its net profit. Reynolds
this week said sales climbed 33% in its latest quarter as the
tobacco company continued to benefit from last year's acquisition
of Lorillard Inc.
BAT's results were also helped by a £ 890 million gain tied to
the sale by Reynolds of the non-U.S. rights to its Natural American
Spirits cigarette brand to Japan Tobacco Inc. as well as by BAT's
acquisition in October of the 24.7% of Souza Cruz SA—Brazil's
largest cigarette maker— it didn't already own.
Revenue at BAT rose 4.2% to £ 6.67 billion, helped by higher
volumes and pricing. Berenberg analyst Jonathan Leinster described
the sales growth as "very strong compared to that of international
peers."
Group cigarette volume was 332 billion, an increase of 3.4% on
the same period last year, or 2.1% on an organic basis.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com and
Razak Musah Baba at Razak.Baba@wsj.com
(END) Dow Jones Newswires
July 28, 2016 04:55 ET (08:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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