Tobacco giant BAT's profits slip 3%
British American Tobacco showed the impact of the strong pound on its British business today after profits for the first three months of the year slipped 3% to £454m (€381m).
The group, whose brands include Kent, Dunhill, Lucky Strike and Pall Mall, said weakness in nearly all of its key currencies had offset a 5% improvement in volumes to 192 billion cigarettes.
At an operating level, profits before exceptional items were ahead 3%, although this would have been 9% higher at constant exchange rates, the company added.
The trading performance was driven by the impact of acquisitions made in Italy, Serbia and Peru during 2003, coupled with 3% growth in BAT’s frontline brands, particularly Kent following strong demand in Japan and Russia, and Pall Mall after the brand achieved “outstanding results” in Italy.
Chairman Martin Broughton, who is due to leave the company for British Airways in the summer, said: “We expect our real momentum to continue, although these results clearly demonstrate the extent to which good progress can be masked by the impact of the strength of sterling on the translation of our profit.
Earlier this year, BAT announced a 26% fall in annual profits to £1.57bn (€1.31bn) as it faced up to higher restructuring costs and losses on the sale of operations.
During a “highly significant year” for the company, BAT completed the acquisition of Ente Tabacchi of Italy and announced a deal to merge its US business with RJ Reynolds.
The company also racked up one-off costs of £437m (€367m) last year.
