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Johannesburg - British American Tobacco [JSE:BTI] advised Wednesday that it continued to perform well in the nine months to the end of September 2010.
Group volumes from subsidiaries were R526bn, down 1%, while organic volumes were 3% lower than last year as a result of market size declines and an increase in illicit trade in some markets. Volumes were also impacted by the loss of sales in Pakistan after the floods.
The group increased overall market share across its top 40 markets and Global Drive Brands continued to grow, although group volumes were lower, it said.
Group revenue for the nine months grew well, driven by the favourable impact of exchange rate movements, continued good pricing and the acquisition of PT Bentoel Internasional Investama Tbk in Indonesia in June 2009, partially offset by disposals.
While the group's results continued to benefit from foreign exchange movements in the first nine months, this is expected to diminish in the fourth quarter, BAT said.
The four Global Drive brands continued their good performance and achieved overall volume growth of 8%, flattered by increased consumer purchases in Japan ahead of a significant excise driven price increase.
Dunhill was up 21% mainly as a result of brand migrations in Brazil and South Africa, Kent and Lucky Strike grew 2% each and Pall Mall increased by 7%.
BAT said the good performance was achieved in trading conditions which continued to be challenging, with industry volumes markedly lower in a number of markets including Romania, Turkey, Pakistan, Germany and South Africa. In some markets, there was down-trading to illicit trade as a result of pressure on consumers' disposable income, exacerbated by high excise increases. This particularly affected the low price segment.
The group continues to improve its operating margin by addressing the cost base and, amongst other initiatives, has started the information and consultation procedures to close the Lecce factory in Italy.
Paul Adams, Chief Executive, commented: "The challenging economic conditions, excise driven price increases and high unemployment have led to some softening of our volumes. The recession's impact on consumers is still with us and shows no signs of abating. Despite this, we have increased market share in our largest markets, grown the Global Drive Brands and achieved good growth in revenue. We are on track for another year of good earnings growth."
Group volumes from subsidiaries were R526bn, down 1%, while organic volumes were 3% lower than last year as a result of market size declines and an increase in illicit trade in some markets. Volumes were also impacted by the loss of sales in Pakistan after the floods.
The group increased overall market share across its top 40 markets and Global Drive Brands continued to grow, although group volumes were lower, it said.
Group revenue for the nine months grew well, driven by the favourable impact of exchange rate movements, continued good pricing and the acquisition of PT Bentoel Internasional Investama Tbk in Indonesia in June 2009, partially offset by disposals.
While the group's results continued to benefit from foreign exchange movements in the first nine months, this is expected to diminish in the fourth quarter, BAT said.
The four Global Drive brands continued their good performance and achieved overall volume growth of 8%, flattered by increased consumer purchases in Japan ahead of a significant excise driven price increase.
Dunhill was up 21% mainly as a result of brand migrations in Brazil and South Africa, Kent and Lucky Strike grew 2% each and Pall Mall increased by 7%.
BAT said the good performance was achieved in trading conditions which continued to be challenging, with industry volumes markedly lower in a number of markets including Romania, Turkey, Pakistan, Germany and South Africa. In some markets, there was down-trading to illicit trade as a result of pressure on consumers' disposable income, exacerbated by high excise increases. This particularly affected the low price segment.
The group continues to improve its operating margin by addressing the cost base and, amongst other initiatives, has started the information and consultation procedures to close the Lecce factory in Italy.
Paul Adams, Chief Executive, commented: "The challenging economic conditions, excise driven price increases and high unemployment have led to some softening of our volumes. The recession's impact on consumers is still with us and shows no signs of abating. Despite this, we have increased market share in our largest markets, grown the Global Drive Brands and achieved good growth in revenue. We are on track for another year of good earnings growth."
