BAT makes 'good start' but FX movements weigh on growth

30th Apr 2014 07:34

- FX has 10 per cent impact on revenue growth- Volumes trends improve in Q1- Results more skewed towards H2 than in previous yearsBritish American Tobacco (BAT) said it has made a good start to the year despite foreign exchange movements remaining an 'issue' in the first quarter.The cigarettes and tobacco company reported that revenue grew by 2% at constant rates of exchange in the three months to March 31st.However, when using current rates of exchange, revenues were down 12%.Cigarette volumes from subsidiaries were down 1% at 158bn during the period, with a decrease of 1.1% for total tobacco volumes. However, declines moderated from 2013 when full-year cigarette and tobacco volumes fell by 2.7% and 2.6%, respectively.BAT's Chief Executive Nicandro Durante said it was a "good underlying performance", underpinned by an improving trend in volume. "We have grown revenue at constant rates of exchange and our pricing remains on track. Our market share continued to grow, driven by the strength of our Global Drive Brands."He added: "Although foreign exchange remains an issue for reported results, it is a good start to the year. I remain confident of delivering consistent growth in earnings in constant currency terms, which we will recognise with an increase in the dividend."BAT said that while volumes are increasing in the emerging markets, the trading environment in Western Europe remains "challenging". The timing of price increases is expected to be more weighted towards the second half of the year. "This, together with transactional exchange rate impacts which, at today's rates, will moderate over the year, means that results will be more skewed to the second half than in previous years," the company said.BC