BAT keeps the tobacco flag flying, announces 8% half-yearly profit rise |
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Sun, 31 Jul 2005 10:05
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LONDON: Anyone with a working knowledge of present-day market conditions would warn you against investing in tobacco since the market is anything but stable in that particular segment. More specifically the last few years have been forgettable for tobacco companies what with governments deciding to implement strict anti-tobacco legislations. So much so that even advertising these products is frowned upon. In such a scenario, companies are struggling to break even let alone post any profits.
That is why the announcement by British American Tobacco that it had posted an 8 percent increase in pre-tax profits excluding exceptional items has given some cause for cheer to the beleaguered industry. The world's second largest cigarette producer had been in the docks for deciding to cull 530 jobs at its Southampton factory after it had announced its intention to close the plant down.
However, the revelation of profits could bring some relief to the company. BAT announced that the profits for the first half of the year stood at £1.2 billion ($2.1 billion).
This was significantly aided by a 6 percent rise in sales of the so-called 'global brands' like Dunhill, Kent, Lucky Strike and Pall Mall. Additionally, the underlying sales grew by 2 percent overtaking the company's own forecasts of 1-1.5 percent growth. BAT said that the sales growth was particularly encouraging in Russia, Romania, France and Germany. Also the sales volumes continued to be strong in Turkey, Russia, Pakistan, Iran, Romania and Bangladesh.
In the backdrop of these impressive profits, BAT assured investors that they would get a 10 percent hike in the interim dividends.
BAT chairman Jan du Plessis was a pleased man after the announcement of the half-yearly report, "In a challenging environment for global consumer goods companies, we are demonstrating our ability to achieve organic volume growth," he commented. He added that BAT was demonstrating the ability to achieve organic volume growth, "The encouraging profit growth in four of our five regions, the continuing benefit arising from the Reynolds American transaction and the real momentum behind our global drive brands all point to a highly satisfactory year," he concluded.
After the announcement of the half-yearly profits, BAT shares rose by 1.9 percent to 1,093 pence in early afternoon trading on the London Stock Exchange.
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