British American Tobacco Plc. (BTI,BATS.L) Thursday reported that its first-quarter revenues edged up 1 percent reflecting adverse movements in some of its key trading currencies. At constant exchange rates, revenue grew 5 percent, driven by a strong pricing environment, despite lower volumes.
Chief Executive Nicandro Durante said, "This is a good performance against a backdrop of fragile economic conditions persisting in many parts of the world. We have grown revenue, our pricing momentum remains strong and our Global Drive Brands continue to perform well. It is a good start and I remain confident of another year of earnings growth in line with our long term strategic goals."
In its interim management statement for the three months ended March 31, British American said it performed well during the period with continued growth in revenue and Global Drive Brands.
According to the company, market share in the Top 40 markets grew strongly, although volumes were lower than last year, as a result of the adverse impact of excise-driven trade inventory movements in Brazil, the leap year comparator and industry volume decline.
In the quarter, cigarette volumes from subsidiaries decreased 3.7 percent to 160 billion from last year's 166 billion, with a decrease of 3.4 percent for total tobacco volumes.
The company noted that cigarette volumes increased in the Asia-Pacific region, including markets of Bangladesh, Pakistan and Vietnam. This was more than offset by lower volumes at Americas, Western Europe and EEMEA regions.
The four Global Drive Brands' cigarette volumes were up by 1 percent, with their market share growing strongly in the Group's Top 40 markets.
In the quarter, Dunhill volumes increased 5 percent, with good growth in Indonesia, the Middle East and South Korea, partially offset by declines in Brazil. Pall Mall volumes were benefited mainly by growth in Pakistan, Chile, Canada and Italy, partially offset by declines in Uzbekistan and Spain.
Meanwhile, Kent volume dropped 7 percent due to market declines in Russia and Japan. Lucky Strike volumes were hit by market declines in Spain and lower volumes in the Middle East, despite increases in Germany, Poland and Italy.
British American noted that other tobacco products performed well, with Fine Cut tobacco growing strongly, driven by a 9.5 percent increase in Western Europe. Pall Mall, the biggest Fine Cut brand in Western Europe, rose 21.2 percent with growth in Spain, France, Italy and Belgium.
Regarding the current trading, the company noted that the pricing environment remains strong, despite difficult trading conditions in many parts of the world, notably southern Europe. If current exchange rates persist for the rest of the year, the currency headwind that adversely impacted the quarter will reverse.
In London, British American shares are currently trading at 3,624.10 pence, up 76.10 pence or 2.14 percent.
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