FX a drag on top line at BATS

Cigarette and tobacco giant British American Tobacco (BATS) managed to keep its underlying rate of revenue growth stable in the third quarter, though volumes fell as expected.

Group revenue for the nine months to the end of September at constant currency grew by 4%, in line with first-half growth, driven by "continued good pricing", the company announced on Wednesday morning.

However, on a reported basis, sales fell 1% on the back of adverse exchange rate movements. Organic revenues at constant currency rose by 3%. Prior the statement, Panmure Gordon was anticipating a 5% increase in nine-month organic sales.

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"Economic recovery remains fragile this year and difficult trading conditions persist in many parts of the world. However, pricing remains strong, we are growing underlying market share and our Global Drive Brands continue to perform well. The trading performance of the Group is good and we are on track for another year of good earnings growth," said Chief Executive Officer Nicandro Durante.

Group volumes suffered from a "low Q3" and were down 1.2% to 517bn, mainly due to reduced industry volumes and a strong comparator. However, the company assured that the effect is expected to "moderate" come the fourth quarter. Panmure Gordon had expected a lesser 1% decline in volumes.

As for the company's four 'Global Drive Brands' (Kent, Dunhill, Pall Mall and Lucky Strike), they continued their good performance with volumes growing by 3% overall.

As for the trading environment, BATS said that it "continues to be challenging, with industry volumes under pressure. In this environment the expansion of illicit trade remains a threat, driven by excise increases and pressure on consumers' disposable income."