BATs set for 'very good year'

27th Jul 2011 07:39

Interim figures from cigarettes maker British American Tobacco (BATs) were slightly ahead of expectations, as higher prices offset volume weakness.Revenue in the first half of 2011 rose 2% to £7,438m from £7,298m the year before. Organic revenue at constant rates of exchange grew by 7%.Adjusted profit from operations jumped 12% to £2,760m from £2,460m the year before, ahead of the £2.67m expected by broker Charles Stanley. Reported operating profit climbed 18% to £2,691m from £2,271m. Basic earnings per share (EPS) surged 23% to 94.5p from 76.9p the year before, while adjusted diluted EPS moved up by a tenth to 96.1p from 87.1p. Charles Stanley had pencilled in a figure of 95p for adjusted EPS.The broker was bang on, however, with its forecast of an interim dividend of 38.1p, up from 33.2p last year. Group volumes fell 1% year-on-year (YOY) to 344bn, but BATS grew market share during the reporting period as the industry as a whole contracted. Organic volumes were also down by 1%.The four "Global Drive Brands" all racked up YOY volume growth: Dunhill was up 1% per cent; Kent 16%; Lucky Strike 8%; and Pall Mall 14%. In aggregate, the four brands achieved volume growth of 11%."With continued pricing momentum, an increase in market share and the rate of volume decline moderating, we are on track for another very good year," predicted chairman Richard Burrows.The shares opened 11.5p lower at 2,849.5p on the day of the results announcement.