British American Tobacco Shares Fall on LFL Volume Decrease -- Update

(Adds information on cigarette volumes, adjusted organic operating profit, comment from Accendo, and share price)

 
By Carlo Martuscelli 
 

Shares of British American Tobacco PLC (BATS.LN) were down in early trade Thursday after the company said that it sold fewer cigarettes and other tobacco products on a like-for-like basis in 2017.

The producer of Lucky Strike and Dunhill cigarettes said that its volume of cigarettes and tobacco-heating products sold over the year--excluding the impact of the acquisition of Reynolds American Inc. (RAI)--declined by 2.6%. The company said that the decrease was experienced across all regions.

Mike van Dulken, head of research at Accendo Markets, said that falling volumes could become a problem unless the company could keep increasing prices.

The company noted that its falling volumes were better than the market overall, which declined by an estimated 3.5%.

The tobacco company posted a pretax profit of 29.59 billion pounds ($41.30 billion) for the year ended Dec. 31 compared with GBP6.25 billion in the previous-year period. Revenue increased 38% to GBP20.29 billion, it said.

Net profit was GBP37.53 billion, up from GBP4.65 billion the year before.

The sharp increase in profit was attributable to the acquisition of Reynolds American, which resulted in a gain of GBP23.29 billion, as well as deferred tax credits from U.S. tax reform.

Adjusted organic operating profit at a constant exchange rate, which excludes the impact of currency movements and acquisition, was up 3.7% at GBP5.68 billion.

BAT said the company had established a new strategic portfolio of brands that combined its existing Global Drive Brand portfolio with the strategic brands that were part of RAI--which include Camel, Newport and Natural American Spirit--as well as its reduced-risk products.

Shares of BAT at 1009 GMT were down 226 pence, or 5.1%, at 4,223 pence.

Write to Carlo Martuscelli at [e-mail]

(END) Dow Jones Newswires

February 22, 2018 05:27 ET (10:27 GMT)

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