British American Tobacco Nine-month Volumes Up 2%

10/28/2009 5:58 AM ET

(RTTNews) - British American Tobacco Plc (BTI: News ) Wednesday reported a 2% rise in group volumes for the nine-month period ended September 30, while organic volumes dropped 3%. The company said it performed well in the period despite slow volume growth.

The world's second largest quoted tobacco group by global market share said that group revenue for the nine-month period grew strongly in constant currency terms, driven by the continued good pricing momentum and volume growth from the acquisitions made in the middle of last year as well as the acquisition of PT Bentoel Internasional Investama Tbk in Indonesia on June 17. The company also said that all regions contributed to this good result. In addition, revenue benefited from the favorable impact of significant exchange rate movements.

According to the company, group volumes from subsidiaries rose 2% in the period to 533 billion from 524 billion a year ago, driven by the acquisitions of ST, Tekel and Bentoel. Organic volumes were down 3% compared to last year as a result of a sharp decline in the low margin volumes acquired in the ST and Tekel transactions.

The company stated that it achieved the strong performance against deteriorating trading conditions, with industry volumes lower in a number of markets including Japan, Russia, Brazil, Italy and South Africa, as well as a decline in the premium segment in the third quarter. In some markets, particularly in Central and Eastern Europe, there was down-trading to illicit trade as a result of excise increases, affecting the low price segment.

Asia-Pacific volumes for the nine-month period remained flat with last year's 134 billion. Americas volume declined to 111 billion from 119 billion in the previous year period. Western Europe volume was 98 billion, up from 89 billion a year earlier. Eastern Europe volume declined to 95 billion from 102 billion in the same period of fiscal 2008. Africa and Middle East delivered nine-month period volumes of 95 billion, higher than last year's 80 billion.

Further, British American Tobacco, which sells its brands in more than 180 markets, said that the four Global Drive Brands had a good performance and achieved overall volume growth of 4%. Dunhill was up 6%, Lucky Strike 5% and Pall Mall grew 9%. Kent volumes declined 2% mainly due to industry volume declines in its key markets.

Commenting on the results, Paul Adams, Chief Executive of British American Tobacco, stated, "Our consumers are clearly finding the current economic conditions difficult, as unemployment continues to rise. This has led to a softening of our volumes, although I am encouraged by the growth in our Global Drive Brands and the strong growth in revenue."