Archive for July, 2013

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Video interview: BAT CEO Durante on 2013 half-year results

| July 31, 2013

This video was originally published by Mercantos Investor Video, a provider of financial news, featuring video interviews and webcasts from FTSE100 and FTSE250 companies.

BAT’s volume down in first six months

| July 31, 2013

British American Tobacco’s cigarette volume during the six months to the end of June, at 332 billion, was down by 3.4 percent on that of the six months to the end of June 2012.

Volume was increased in the company’s Asia Pacific region by 5.5 percent to 100 billion, but it was down in its other three regions: in the Americas by 9.4 percent to 64 billion; in Western Europe by 8.3 percent to 57 billion; and in the EEMEA (Eastern Europe, the Middle East and Africa) by 4.5 percent to 111 billion.

The company’s four global drive brands outperformed the totality of its offering. Dunhill’s volume increased by 6 percent, with growth in Indonesia, Chile, South Africa and South Korea partially offset by declines in the GCC and Brazil, mainly as a result of the one-off impacts in the comparator period.

Kent maintained market share despite lower volume of 3 percent due to industry declines in Russia and Romania, partially offset by growth in other Eastern European markets.

Lucky Strike’s volume was down by 7 percent, mainly driven by the market contraction in Spain and instability in the Middle East, partially offset by higher volumes in Germany, France, Philippines, Poland and Argentina.

And Pall Mall’s volume rose by 8 percent, with strong growth in Pakistan, Chile, Romania, Canada and Mexico partially offset by lower volumes in Russia and Spain.

Total tobacco volume, which includes other tobacco products converted as cigarette equivalents, was down by 3.1 percent to 346 billion.

Fine-cut volume grew by 6.7 percent to 10 billion cigarette equivalents in Western Europe, mainly in Spain, Italy, Poland, Belgium and France. And Pall Mall was said to have remained “by far the biggest brand in Western Europe in this category.”

BAT’s revenue during the six months to the end of June, at £7,572 million, was up by 2 percent on that of the six months to the end of June 2012.

Adjusted profit from operations was up by 4 percent to £2,944 million; profit from operations was up by 3 percent to £2,807 million; adjusted diluted earnings per share were up by 8 percent to 109.1p; and basic earnings per share were up by 9 percent to 106.6p.

“We performed well during the first half of the year with strong pricing momentum, increased market share and continued growth in our global drive brands, strengthening the foundations for another year of good results in line with our long term strategic goals,” CEO Nicandro Durante said in reviewing the results.

“The underlying business performance, measured by constant rates of exchange, was strong, with revenue up by 4 percent, adjusted profit up by 6 percent and adjusted diluted earnings per share up by 10 percent.

“The business performance was impacted by industry volume contraction in some parts of the world and fragile economic conditions persisting, notably in Europe. Despite the good performance in Asia-Pacific, group cigarette volume from subsidiaries was 332 billion, down 3.4 percent. This was also adversely compounded by trade inventory movements last year in specific markets, notably Brazil and the GCC, and the leap-year impact. Excluding these one-offs, the cigarette volume decline would have been 2 percent.

“We continued to grow cigarette market share in our top 40 markets, led by the good performances of the global drive brands. Globally, Dunhill, Lucky Strike and Pall Mall all grew market share, while Kent was stable. Collectively, our four GDBs achieved good volume growth of 2.3 percent. Our other international brands grew by 1.9 percent and, combined with our global drive brands, now make up nearly 60 percent of our total cigarette volume.

“This month, CN Creative, our stand-alone company specializing in the development of next-generation products, launched Vype in the U.K., the group’s new e-cigarette brand. This is another step in our ongoing commitment to developing a portfolio of next-generation products alongside our tobacco business.”

Retiring BAT COO will not be replaced

| July 31, 2013

John Daly will step down as British American Tobacco’s chief operating officer at the end of December and will not be replaced.

“It is not intended, at this point in time, to appoint a further executive director or successor to the role of chief operating officer,” a note on BAT’s website said. “The four regional directors and the group operations director will report to the chief executive officer directly from 1 January 2014.”

Daly was appointed to the management board in 2004, joining the main board as COO in 2010. During his 19-year career with BAT, he held various senior management positions, notably marketing director—P J Carroll, area director—Middle East & North Africa and regional director—Asia Pacific.

“The board and I wish John all the very best for a thoroughly well-earned retirement,” said CEO Nicandro Durante. “We will all miss John’s passion, commitment, energy and great humor.

“John has played a huge role in the history of British American Tobacco, steering all the businesses he has run to outstanding results. He will be remembered for his love of the business and his commitment to the people in the organization. He leaves behind a true leadership legacy.”

According to the note, during the first quarter of 2014, Daly will “focus on the transitioning of key projects and initiatives.”

He will retire from the board in April 2014.

Ireland’s illicit trade booming

| July 31, 2013

The National Federation of Retail Newsagents (NFRN) in Ireland is advising the government to tackle the sale of illicit cigarettes, according to a story in the Irish Examiner.

The story said that a new [unspecified] survey had shown that almost 28 percent of discarded packs across the country were untaxed and, therefore, illicit.

The survey, covering 22 major centers, revealed also the existence of regional black spots where the illicit trade in cigarettes is on the increase.

The president of the NFRN, Joe Sweeney, is calling for the introduction of on-the-spot fines for the possession of counterfeit tobacco, as is the case in Canada.

The research showed that smokers in Drogheda, County Louth, and Tallaght, Dublin, were the biggest consumers of illicit cigarettes, while smokers in Clonmel, County Tipperary, consumed the fewest.

Proposal would see some tobacco excise earmarked for Russia’s health care

| July 31, 2013

President Vladimir Putin has urged Russia’s health and finance ministries to devise a scheme for channeling a portion of tobacco excise revenue to the health-care sector, according to a story in Russia Beyond The Headlines quoting an Interfax report.

The idea was said to have been proposed by Health Minister Veronika Skvortsova and the Astrakhan regional governor, Alexander Zhilkin, at a meeting of the State Council presidium.

“This is something to be discussed with the Finance Ministry,” said Putin. “You know how the Finance Ministry looks at this. We have many very important things to do here in Russia. Channeling taxes to some specific goal would be a very unusual thing to do. This is done in some countries, but not too often.”

Skvortsova said the funding would be extremely useful for the health services, which were provided without charge.

BAT launches e-cigarette in UK

| July 30, 2013

British American Tobacco said today that it had launched on the U.K. market its first electronic cigarette.

Vype will be made available initially online, though there are plans to move it into mainstream retail outlets from September 2013.

In a note posted on its website, BAT said that Vype used a nicotine e-liquid that was made in the U.K. to current Good Manufacturing Practice (cGMP) standards and that contained only pharmaceutical-grade nicotine.

Vype is currently available in a disposable format, but there are plans to supplement the product range with a rechargeable version in the near future.
“The development of inhaled nicotine products, which includes e-cigarettes, is a natural extension of British American Tobacco’s approach to tobacco harm reduction, which has been evolving over a number of years,” BAT’s press note said.

BAT already had an interest in electronic cigarettes through CN Creative Ltd., a U.K.-based startup company that offers electronic cigarettes on the U.K. market and overseas.