BAT earnings up thanks to hike in prices

BRITISH American Tobacco yesterday reported an increase in earnings after it raised its prices to counter a tough sales environment.

Cigarette volumes were down to 344bn in the six months to June, from 348bn year-on-year.

But profit before tax was $2.8bn (£1.7bn) over the same period, up from $2.3bn. Revenue edged up by two per cent to £7.4bn.

The business saw sales rises for its four “global drive brands” support revenue, with Dunhill cigarettes up one per cent, Kent 16 per cent, Lucky Strike eight per cent and Pall Mall 14 per cent.

Chief executive Nicandro Durante said there were signs of recovery in the group’s key markets and volume decline was moderating.

He said that with its price rises and share and margin growth, it was “on track for another very good year”.

The company has announced an interim dividend of 38.1p a share, an increase of 15 per cent.

BAT bought back 13m shares in the first half of the year at a cost of £335m and an average price of £25.76 per share.

The company has been championing its brands in emerging markets, where disposable income is burgeoning.

In the six months to 20 June, sales of Pall Mall rose by 14 per cent year-on-year, with growth in Pakistan, Russia and Romania partly offset by declines in Mexico, Italy and Spain. In Asia-Pacific, profit was up £115m to £766m as a result of strong performances in Japan and Indonesia and favourable exchange rates. Volumes at 95bn were up one per cent, with increases in Japan, Vietnam and Pakistan, offset by lower volumes in Australia, South Korea and Malaysia.