FX weakness limits revenue growth at BATS

published 25 July 2012

Organic revenue growth at British American Tobacco was robust in the first half, though currency headwinds in key markets held back reported sales growth.

Revenues were flat in the six months to June 30th at £7,452m, more or less unchanged from the £7,438m reported the year before. However, on an organic basis (at constant rates of exchange), turnover was 4% higher helped by continued good pricing momentum.

"Despite currency weaknesses in key markets and tough comparator one-off events in 2011, the underlying business is performing well," said Chairman Richard Burrows.

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The group, which makes Dunhill, Pall Mall and Lucky Strike cigarettes, has been exposed to several adverse exchange rate movements in the half, especially the weakness against sterling of the Brazilian real, euro, South African rand and Russian rouble.

Meanwhile, cigarette volumes were 344bn, in line with the first half of last year, which the group said was a strong performance against a comparator period which benefited from the one-off increased sales volumes in Japan and despite contracting industry volumes in some markets, notably Southern Europe.

Pre-tax profit in the first half amounted to £2,873m, slightly ahead of the £2,787m reported the year before.

The board has declared an interim dividend per share of 42.2p, up 11% year-on-year, set at one third of last year's total dividend as usual.

"Despite the global economic uncertainty and the adverse impact of exchange rates, British American Tobacco has delivered another good set of results. The underlying business continues to perform well and we are confident of another year of good earnings growth," Burrow said.