British America Tobacco: Vintage year for

(Apud ASH Daily)

Share view: Vintage year for British America Tobacco

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4 November 2008

 

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Richard Hemming

Times may be hard, but third-quarter figures from British American Tobacco(BAT) suggest that hard-pressed consumers have few intentions yet of giving up on their cigarettes. Indeed, the performance prompted chief executive Paul Adams to remark that '2008 is shaping up to be a vintage year for BAT'. Whether consumers become keener to kick the habit as things get tougher remains to be seen, but Mr Adams sounds bullish. 'We're not seeing anything at the distributor or consumer level. We're not worried, but we recognise the risk.'

The world's second largest cigarette maker saw its operating profit increase 18 per cent to £2.714bn in the three months to the end of September. Exclude the effect of exchange rates and operating profit grew 10 per cent. The main driver of growth was from emerging markets in eastern Europe, Africa, the Middle East and Latin America, with revenues over the quarter climbing more than 25 per cent. Another key factor was the performance of BAT's premium products, with sales rising 7 per cent on brands including Dunhill and Kent - so it seems that customers are not yet trading down to cheaper brands as consumer conditions get tougher./.../