BAT in share buyback as earnings rise

 
City A.M. Reporter
British American Tobacco, the world's second-biggest cigarette maker, announced a share buyback programme of £750m as it met forecasts with a 15 per cent rise in 2010 earnings.

The London-based maker of Kent, Dunhill, Lucky Strike and Pall Mall cigarettes, said it had gained from higher prices, acquisitions and the pound's weakness, and it was upbeat about future growth despite tough global economies.

"There will be further global economic challenges ahead but we can see strong opportunities for growth too. That's why I am confident we can continue to deliver superior returns in 2011 and beyond," said Chairman Richard Burrows in a statement.

The group restarted its share buyback programme after having suspended it early in 2009 as the world financial crisis worsened and the group prepared to make a number of medium-sized acquisitions, such as Tekel in Turkey.

The group has suffered as smokers switched to cheaper – and sometimes illicit – cigarettes in the global downturn as they have been hit by excise tax rises and high unemployment, which BAT has sought to offset to price rise and cost savings.

As a result, the group's global cigarette volumes fell two percent, but after price rises annual revenues rose five per cent to £14.88bn

Rival Imperial Tobacco (IMT.L) reported a surprise return to volume growth of 0.5 percent in the last quarter of 2010 with revenue 5 percent ahead, while Philip Morris International (PM.N) fourth quarter volumes were off 5.1 percent, but underlying sales 2.8 percent ahead.

The full-year dividend, which is set at 65 per cent of earnings, rose 15 per cent to 114.2 pence a share.