Dire warnings can’t stop BAT from selling 332-billion cigarettes in six months
British American Tobacco sold 332-billion cigarettes during the six months to end-June — 3.4% more than in the matching period in 2015 despite efforts by various governments to curb smoking.
Growth in cigarette volumes translated into a 4.2% rise in interim revenue to £6.67bn.
Net profit, however, declined 2.2% to £2.45bn. British American Tobacco nevertheless raised its interim dividend by 4% to 51.3p.
Although sales in Australia suffered following the introduction of plain packaging laws and higher taxes, British American Tobacco listed that country along with Ukraine, Russia, Italy and Turkey as markets that helped its Rothmans brand increase volumes by 48.8%.
Regarding Australia, the results statement said: "Excise-led price increases resulted in market contraction and a fall in volume, although market share was up as Rothmans grew strongly in the low-priced segment. Profit declined due to lower volume and down-trading."
In SA, British American Tobacco’s "volume fell due to down-trading to the low priced segment".
Its Benson & Hedges, Pall Mall and Dunhill all grew market share in SA. "Profit was down due to lower volume and the adverse transactional impact of foreign exchange on cost of sales, partially offset by pricing," the company said in its results statement.
British American Tobacco’s results broke sales and profit into four geographical segments.
Revenue declines of 6.3% in the Americas and 0.12% in the Eastern Europe, Middle East and Africa region was compensated for by an 18.2% surge in sales in Western Europe.
Poland, Romania, France and Italy helped it increase the volumes of cigarettes sold in this region by 11% to 57-billion.
In Italy, Rothmans’ market share grew strongly, partly due to the migration from Pall Mall, leading to growth in total market share over the six months to June. Volume was up, although profit fell partly due to the timing of marketing investment.
Its Vype brand of e-cigarette has grown to 9% of the UK’s cigarette market, 8% in Germany and 5% in France. Vype was launched in five Italian cities, with further expansion planned.
The decline in revenue and cigarette volumes sold in the Americas was blamed on Brazil, Venezuela, Canada and Argentina.
In Brazil, lower consumer disposable income, higher value added tax (VAT) and excise-led price increases drove down-trading, market contraction and higher levels of illicit trade, adversely affecting volume and profit. Market share fell, from a record high, despite continued growth in Lucky Strike.
Its profit in Venezuela grew despite lower cigarette sales thanks to higher prices that compensated for currency devaluation and inflation.