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Cape Town - British American Tobacco (BAT), which has a secondary listing on the JSE, has hiked its interim dividend 26% to 27.9p/share (360c/share) on the back of a successful global brands drive which saw cigarette volumes up 5% in the half-year to end-June.
Favourable pricing momentum and exchange rates, as well as recent acquisitions (Skandinavisk Tobakskompagni and Tekel), saw BAT's revenue increasing 24% to £6.8bn. Profits form operations were 22% higher at £2.1bn.
Three of BAT's four Global Drive Brands continued their strong performance with Dunhill up 8%, Lucky Strike 7% and Pall Mall 10%. Only Kent bucked the stronger trend, with volumes falling 2%.
BAT chairperson Jan du Plessis said that despite difficult economic and trading conditions in many countries, continued market share growth from the Global Drive Brands - as well as an ability to innovate and a broad geographic spread - should continue to stand the company in good stead.
"These half-yearly results give us confidence that we are very much on track to deliver another year of strong earnings growth."
Investec stockbroker David Sylvester described BAT's interim results as fantastic. "It once again underlines BAT's recession-proof credentials."
Sylvester has high hopes for the second half too. "I would like to forecast 20% profit growth for BAT in the second half, and hopefully a full-year dividend of one pound."
While BAT's interim showing was robust, on closer inspection the effects of the global economic slowdown were evident in the numbers.
The 5% gain in cigarette volumes to 349 billion cigarettes was driven mainly by the recent acquisitions. If the Scandinavian tobacco business and Tekel are excluded, BAT's volumes were down 2%.
Du Plessis said there were "relatively large" market declines in countries like Russia, Ukraine, Japan and Mexico. "Market sizes have principally been affected by rising unemployment, excise-driven price increases, the growth in illicit trade and trade inventory reductions."
Although downtrading on a global basis was limited, it was affecting some markets, said Du Plessis.
- Fin24.com