Revenues and profits up for British American Tobacco even as cigarette volumes fall

 
Alys Key
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Vype is one of the next generation products which BAT is turning to as cigarette sales slide (Source: BAT)

British American Tobacco (BAT) reported improved profits and revenue in the six months to 30 June, even as cigarette volumes declined.

Read more: The number of smokers in the UK has fallen to an all-time low

The figures

The weaker pound boosted revenue, as it jumped 15.7 per cent to £7.7bn. On a constant currency basis the increase was 3.5 per cent to £6.9bn.

Profit came in at £2.6bn, marking a 16.3 per cent rise.

Earlier this week the group confirmed that it had competed a takeover of Reynolds following approval from its shareholders, paying £41.7bn for the 57.8 per cent it did not already own.

Read more: Even Big Tobacco backs the government's plans to deregulate vaping

Why it's interesting

Group cigarette volume was 314bn, down 5.6 per cent down against the prior year, as analysts expected. The group's five core brands - Lucky Strike, Kent, Pall Mall, Rothmans and Dunhill - were down 1.3 per cent.

This reflects a growing shift away from cigarettes in the global market, one which BAT has anticipated with its range of next-generation products.

The 'glo' device, which heats tobacco, has performed above expectations in several launch markets, the company said. BAT has also positioned itself as a leading e-cigarettes provider.

Read more: Brexit is Britain’s chance to cut red tape on vaping

What the company said

Chairman Richard Burrows focused on the growth of next generation products as he commented on the results.

"The group is the largest vapour company in the world and the successful completion of the Reynolds acquisition bolsters our leading position in both NGPs and combustibles," he said. "We remain confident of delivering another year of good earnings growth at constant rates of exchange."

Read more: BAT nabs 40 per cent market share in Bulgaria with buyout of top brands

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