British American Tobacco’s CEO, Nicandro Durante, comments on the company’s 2012 results.
Archive for February, 2013
British American Tobacco’s cigarette volume during the year to the end of December, at 694 billion, was down by 1.6 per cent on that 2011, 705 billion.
The drop in volume was attributed to industry contractions in Western Europe, Brazil and Egypt, and losses in respect of low value brands in Indonesia and Turkey.
The company’s organic volume was down by 2.0 per cent to 691 billion; or by 1.7 per cent excluding the effect of the Japanese market where foreign manufacturers made volume and shares gains in 2011 following the disruption caused to Japan Tobacco Inc’s manufacturing and distribution operations by the earthquake and tsunami that struck on March 11, 2011.
In BAT’s EEMEA (Eastern Europe, Middle East and Africa) region, volume was down by 0.4 per cent to 235 billion; in its Asia Pacific region, volume was down by 1.6 per cent to 188 billion; in its Americas region, volume was down by 0.7 per cent to 142 billion; and in its Western Europe region, volume was down by 4.4 per cent to 129 billion.
The volume accounted for by the company’s global drive brands grew by three per cent, with Lucky Strike up 11 per cent, Pall Mall up three per cent, Dunhill up two per cent and Kent up one per cent (or four per cent taking out the Japan-market effect).
Global drive brands now account for more than a third of BAT’s volume.
BAT’s reporting of other tobacco products was limited to fine-cut volume in Western Europe, which grew by eight per cent to 14,494 tonnes.
The company’s reported revenue was down by one per cent due to adverse currency movements, while revenue at constant rates of exchange was up by four per cent to £15,999 million.
Reported profits from operations increased by 15 per cent while adjusted profit from operations at constant rates of exchange increased by eight per cent to £5,970 million.
Basic earnings per share were up by 26 per cent to 198.1p, while adjusted diluted earnings per share were up by seven per cent to 207.5p.
BAT’s chief executive, Nicandro Durante, said that BAT had exceeded all of its financial objectives in 2012. (Click here to view a video interview about the 2012 results with Durante.)
“We delivered organic revenue growth on a constant currency basis of four per cent and adjusted profit from operations of eight per cent at constant rates of exchange,” he said. “Despite the adverse exchange rates, once again we delivered excellent returns to shareholders, with adjusted diluted earnings per share up by seven per cent on last year, with an increase of 12% at constant exchange rates.
“We grew our underlying market share in 2012, with good share momentum in the second half of the year. Pricing remains strong and, while our cigarette volumes were down slightly, this was mainly due to industry declines in some of our major markets.”
Turning to next-generation products, Durante said that BAT was developing a portfolio of products.
Nicoventures, a company BAT set up in 2011, was aiming to launch nicotine-based products, and in December BAT had acquired CN Creative, a UK-based company specialising in the development of e-cigarette technologies.
Molins’ sales during the year to the end of December, at £93.0 million, were up by three per cent on those of 2011, £89.9 million.
Its underlying profit before tax was up by nine per cent to £4.9 million and its underlying earnings per share was increased by 19 per cent to 21.8p.
Tobacco Machinery sales were down by nine per cent to £31.1m, but operating profit before exceptional items was maintained at £2.2 million.
Sales within the group’s Scientific Services division, which comprises Arista Laboratories and Cerulean, increased by nine per cent £23.1 million, but operating profit, before exceptional items, decreased by 37 per cent to £1.2 million, mainly as a result of increased infrastructure costs and a ‘particularly uneven work-load at Arista’.
Packaging Machinery sales increased by 12 per cent to £38.8 million, while operating profit, before exceptional items, rose from £0.4 million in 2011 to £1.5 million in 2012.
The chief executive, Dick Hunter, said that the group had continued to show good progress during the year, delivering both increased sales and underlying earnings.
“We have also continued to invest across the group, with a particular emphasis on opportunities within the Scientific Services division,” he said.
“Looking ahead, we have entered 2013 with a good order book and are well placed to make further progress with our various growth initiatives during the year.”
The Altria Group has lost a bid to block a 2009 New York City law banning the sale of flavored smokeless tobacco products except in tobacco bars, according to a CSP (Convenience Store/Petroleum) story quoting a Bloomberg report.
The US appeals court in New York on Tuesday upheld a lower-court ruling that rejected arguments by two Altria units, US Smokeless Tobacco Manufacturing and US Smokeless Tobacco Brands, that the city’s measure was pre-empted by federal law.
Brian May, a spokesperson for Altria, was quoted as saying that the company was disappointed with the court’s decision and was considering its options.
Tobacconists and petrol station owners in the Netherlands are calling on parliament to make it a criminal offence for the under-16s to be in possession of tobacco products, according to an Expatica.com story quoting the Telegraaf.
Shopkeepers caught selling cigarettes to youngsters face a fine of €450 but the youngsters get off scot-free, the retailers argue.
‘The youngsters get away with it,” Edsko Schuitema, of petrol station owner lobby group Beta was quoted as saying. “But why should the responsibility not be shared?”
Meanwhile, Gert Koudijs, of the tobacconist shop owners’ association, NSO, said that the only way to stop 14-year-olds from buying cigarettes was to fine them for possession.
Dutch MPs are considering plans to increase the age at which teenagers can buy cigarettes from 16 to 18, following industry calls for an increase.
On January 1, it became a criminal offence punishable by fines for under-16-year-olds to be in possession of alcohol.
The Altria Group said yesterday that its board of directors had declared a regular quarterly dividend of $0.44 per common share, payable on April 10 to shareholders of record as of March 15.
The ex-dividend date is March 13.