BAT volumes up 3.4 percent
Nicandro Durante
British American Tobacco’s cigarette volume during the six months to the end of June, at 332 billion, was increased by 3.4 percent on that of the six months to the end of June 2015.
The company reported that, excluding the effect of acquisitions, volume during the first six months of this year was 328 billion; so the ‘organic’ growth was 2.1 percent. And excluding inventory movements impacting 2015, organic growth was 1.5 percent.
Growth in Ukraine, Bangladesh, Russia, Vietnam, Indonesia and Turkey was said to have been partly offset by declines in Pakistan, Brazil, Venezuela and Malaysia.
Volume, at 56 billion, was down by 6.6 percent in the company’s Americas region, but it was up in each of its other regions: in its Asia Pacific region by 2.0 percent to 105 billion; in its Western Europe region by 11.0 percent to 57 billion (5.1 percent organic growth to 54 billion); and in its EEMEA (Eastern Europe, the Middle East and Africa) region by 6.6 percent to 114 billion (5.7 organic growth to 113 billion).
BAT’s market share increased by 0.3 of a percentage point, driven by a strong performance from its Global Drive Brands (GDB), which all grew market share. GDB volume was up by 10.8 percent and GDB market share was up by 0.8 of a percentage point.
Dunhill’s market share was higher and volume was up by 3.4 percent, driven mainly by the brand’s performance in Indonesia, which more than offset its lower volumes in Malaysia, Brazil and Gulf Co-operation Council countries. Kent’s volume increased by 6.8 percent, with market share up by 0.1 of a percent point, driven by its performance in Chile, Turkey, Japan and Russia. And Lucky Strike grew market share by 0.1 of a percentage point and volume by 13.0 percent with growth in Indonesia, Colombia and France more than offsetting lower volume in Argentina and Russia.
Pall Mall’s market share grew 0.1 of a percentage point even though its volume declined by 1.0 percent as growth in Venezuela, Poland and Romania was more than offset by a ‘migration’ to Rothmans in Italy and lower volume, particularly in Pakistan. Rothmans’ 48.8 percent growth in volume and its market share growth of 0.5 of a percentage point was driven by its performance in Ukraine, Australia, Russia, Italy and Turkey.
Other international brands’ cigarette volume declined by 7.4 percent, as growth in State Express 555 and Craven A was more than offset by lower volumes for Vogue, Viceroy, Peter Stuyvesant and JPGL.
BAT’s revenue, calculated at constant rates of exchange during the six months to the end of June, at £6,900 million, was up by 7.8 percent on that of the six months to the end of June 2015. It was up by 4.2 percent to £6,669 million at current rates.
Adjusted profit from operations was up by 1.8 percent to £2,551 million at constant rates of exchange, but down by 2.2 percent to £2,452 million at current rates.
Profit from operations was down by 1.6 percent to £2,309 million at constant rates of exchange, and down by 5.7 percent to £2,213 million at current rates.
Adjusted diluted earnings per share were increased by 13.4 percent to 113.6p at constant rates of exchange, and increased by 10.9 percent to 111.1p at current rates.
Basic earnings per share were up by 1.0 percent to 143.8p.
In announcing the half-year results, CEO, Nicandro Durante, said that the group’s performance had been ‘very good’, underpinned by strong organic growth.
He said that group cigarette volume had increased by 3.4 percent to 332 billion while it was estimated that industry-wide volumes would decline by about 2.5 percent for the full year.
“In the first half of 2016, we have made excellent progress in our NGP [Next Generation Products] business,” Durante said.
“The global vapour products category continues to grow at a significant rate and, following the geographic expansion of Vype, we are now present in the biggest vapour markets outside of the US. Vype is performing extremely well – having reached nine percent category retail share of market in the UK, as measured by AC Nielsen, and an estimated category retail share of eight percent in Germany and five percent in France. It is now available in several innovative product formats, with new product launches and upgrades planned for this year. Further expansion to new markets are planned later in the year and into 2017.
“The integration of the Chic Group, the market leading vapor product business in Poland is also on track and our recent acquisition of Ten Motives in the UK has increased our strength in the traditional grocery and convenience channels in the UK vapour market.
“iFuse, our first tobacco heating product, was launched in Bucharest, generating encouraging consumer interest, with a country-wide roll out planned in the next 12 months.
“Our continued significant investment in NGP R&D means we have an exciting pipeline of new products and launches planned.”
Durante said he was confident that the group remained on track for another year of good earnings growth at constant rates of exchange despite the continuing difficult trading environment in a number of its key markets.