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Cigarettes giant British American Tobacco (BAT) today proved that smokers have not kicked their nicotine habit despite the recession.
The maker of Dunhill, Lucky Strike, Kent and Pall Mall cigarettes beat the City's forecasts with a 15.5% jump in pre-tax profits to £2.11 billion in the six months to 30 June, compared with the same period a year earlier.
But BAT said some puffers are trading down to its cheaper brands, with premium volumes falling 1%, and that the illicit trade has grown because of tax increases.
The company said it has been helped by its broad geographic spread, although it remains concerned about the effect of rising unemployment around the world.
Sales were up 24% in the period to £6.8 billion, boosted by acquisitions. The company forked out
$1.72 billion (£1.04 billion) last year to buy Tekel, claiming a 36% hold on Turkey's cigarette market where almost two thirds of adult men smoke. It also snapped up Denmark's Skandinavisk Tobakskompagni this year.
Sterling's weakness gave a £180 million boost to operating profits.
BAT's shares climbed 19p to 1859p as analysts raised their earnings expectations for the year.
The company has upped its half-year dividend by more than a quarter to 27.9p.
Reader views (1)
Yesterday's news said one million had quit smoking. If this is the case, tobacco companies would not have made such gains. This must show that surveys on smoking cannot be trusted.
- Chas, Little Britain, 30/07/2009 11:20
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