BAT’s first-half volume down but share up

British American Tobacco’s cigarette volume during the six months to the end of June, at 322 billion, was down by 2.9 percent from that of the six months to the end of June 2014.

The company estimated that the industry-wide volume decline during this period was 3.5 percent and that it had enjoyed a ‘significant increase in market share’.

Volume, at 52 billion, was stable in the company’s Western Europe region, but down in each of its other regions: in its Asia Pacific region by about 1.0 percent to 103 billion; in its EEMEA (Eastern Europe, the Middle East and Africa) region by about 4.5 percent to 107 billion; and in its Americas region by about 4.8 percent to 60 billion.

BAT’s total tobacco volume, which includes other tobacco products converted as cigarette equivalents, was down from 344 billion during the six months to the end of June 2014 to 334 billion during the six months to the end of June 2015.

The company reported that its global drive brands volume was increased by 6.0 percent and that their share had continued to grow strongly. Dunhill’s volume increased by 2.4 percent with growth driven mainly in Indonesia and Brazil, partially offset by lower volumes in South Korea, Malaysia and Gulf Co-operation Council countries. Kent’s volume was down by 0.9 per cent as good growth in Iran and Turkey was more than offset by market contraction in Russia, Ukraine and Romania.

Lucky Strike’s volume was increased by 2.9 percent driven by growth in Belgium, Mexico and France that offset lower volumes in Russia and Italy. Pall Mall’s volume grew by 2.8 percent with strong performances in Pakistan, Poland, Mexico and Canada more than offsetting lower volumes in Italy, Russia and Australia.

And Rothmans’ volume grew by 36.6 percent, with strong performances in Russia, Australia, Turkey, Kazakhstan, Italy and Ukraine.

The volume of other international brands declined by 6.1 percent as growth in State Express 555 and Shuang Xi were more than offset by volume declines in respect of Craven A, Peter Stuyvesant and Viceroy caused by market declines in their strongholds.

BAT’s revenue, calculated at constant rates of exchange during the six months to the end of June, at £6,962 million, was up by 2.4 percent on that of the six months to the end of June 2014. It was down by 5.9 percent to £6,398 million at current rates.

Adjusted profit from operations was up by 1.3 percent to £2,699 million at constant rates of exchange, but down by 6.0 percent to £2,507 million at current rates.

Profit from operations was increased by 3.0 percent to £2,533 million at constant rates of exchange, but down by 4.6 percent to £2,347 million at current rates.

Adjusted diluted earnings per share were increased by 3.9 percent to 105.8p at constant rates of exchange, but 1.6 percent lower to 100.2p at current rates.

Basic earnings per share were up by 52.6 percent to 142.4p.

In announcing the half-year results, CEO, Nicandro Durante, said that the business had performed well despite a strong volume comparator and the intensified low price competition in Australia. But he added that adverse foreign exchange rate movements had significantly impacted the company’s results.

“Cigarette volume was down 2.9 percent although the consistent growth of GDB volume, higher by 6.0 percent, demonstrates that our strategy continues to deliver,” he said in part. “Underlying volume, excluding one-offs, was down by approximately 2.5 percent. This is against an industry decline of around 3.5 percent following significant excise driven price increases in Russia, Australia and South Korea.

“Our market share, an important indicator of the underlying strength of our business, grew strongly with corporate share up 40 basis points in the Key Markets and the Global Drive Brands continuing to perform excellently with share up 80 basis points. Pricing in general continued to be strong, with price/mix ahead of last year.”