“The Group has been impacted by adverse exchange rate movements, in particular, the weakness of the Brazilian real, South African rand, Australian dollar, Canadian dollar, Russian rouble and Japanese yen against sterling,” said [DATA BTI:British American Tobacco plc] (BAT) in a statement.
For the six months ended 30 June 2014, the global tobacco group posted a four per cent increase in adjusted group profit from operations at constant rates of exchange however it decreased by nine per cent at current rates.
Profit from operations at current rates of exchange was 12 per cent lower at 2,458 million British pounds while basic earnings per share also fell by 12 per cent from 106.6 pence to 93.3 pence and group cigarette volume declined by 0.4 per cent to 331 billion.
On the other hand, the group’s cigarette market share continued to increase in its key markets as a result of a 5.7 per cent increase in its Global Drive Brands.
“British American Tobacco performed well during the first half of the year but, as expected, results were affected by the strength of sterling. We are consistently increasing our market share, driven by the strong growth of our Global Drive Brands. Tight control of costs resulted in an improved operating margin,” said Richard Burrows, chairman of BAT.
“We remain confident of high single-digit earnings growth at constant rates of exchange, which we have said we will recognise with an increase in the dividend.”
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The board of BAT declared an interim dividend of 47.5 pence, a six per cent increase.
BAT’s Dunhill brand reported a volume increase of 4.9 per cent with growth in Indonesia, Brazil, Romania and South Africa while Kent’s volume declined by 2.9 per cent due to industry declines in Russia and Romania
Lucky Strike volume was also down by 1.9 per cent due to slow growth in Chile, Poland and Germany while Pall Mall volume rose by 7.6 per cent with strong growth in countries such as Pakistan, South Africa and Argentina.
Rothman grew by 32.8 per cent with strong performances in countries such as Russia, Italy, Ukraine and South Africa.
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BAT believes that it is well placed to manage business risks associated with current global economic conditions due to the strong performance of its Global Drive Brands and its leading position across a number of countries.