Brazilian sales bolster BAT smokes to record profit
Thursday 04 May 1995
Results released yesterday by the tobacco to financial services conglomerate showed that the pre-tax total rose 19 per cent to £498m in the three months to March, surprising many analysts, who were already braced for good figures after an upbeat forecast by the chairman Sir Patrick Sheehy last week.
After a strong run upwards from 443p two weeks ago, the shares lost 3p to 474p yesterday.
Sir Patrick said: "All in all, the year has got off to a very good start for BAT Industries . . . Despite a more normal tax rate in 1995, we will continue to reward shareholders with a significant real increase in the dividend."
BAT said tobacco volumes had jumped 24 per cent in the latest three months, boosted by the year-end acquisition of American Tobacco, and a strong recovery at Souza Cruz, the Brazilian subsidiary. A new economic stabilisation plan mid-way through the year helped cigarette sales in the country jump.
Souza Cruz yesterday reported net income of 32.9m Brazilian reals (£22.2m) for the first quarter of 1995, after a loss of 25.9m last time.
Around 8 percentage points of BAT's volume increase was due to the turnround in Brazil, with a further 10 points coming from acquisitions in the US, Russia and Uzbekistan.
The rise, including 6 points of organic growth, fueled a 27 per cent increase in tobacco profits to £335m.
BAT said American Tobacco, which raised its market share from 11 to 18.5 per cent in the US, was living up to expectations in terms of volume and financial benefit. BAT warned that its market share would slip by about 1 per cent once the Montclair brand was sold to satisfy the Federal Trade Commission. But American Tobacco remains on track to meet forecasts at the time of acquisition that it could double last year's profits of $200m over the next two years.
Meanwhile, a £200m expansion is on track to double production capacity at Southampton for State Express 555, the favorite cigarette of Mao Tse- Tung and now the leading international brand in the Far East.
The continuing bad publicity surrounding private pensions and other personal financial services hit premium income at Allied Dunbar, one of BAT's two UK insurance businesses. Total premium income slumped 24 per cent to £346m, with poor stock market performance blamed for a 56 per cent slide in the single premium investment product business.
There were also clear signs that the insurance cycle is turning down in the 8 per cent fall to £676m in gross premium income at Eagle Star, the other UK business. Despite static profits from the two British businesses, a 14 per cent increase in profits from Farmers, the California mutual insurer managed by BAT, pushed trading profits from financial services 10 per cent ahead to £240m.
- 1 Oxygen-starved 'dead zones' with no marine life up to 100-miles long discovered in the Atlantic Ocean
- 2 The man who filmed the Freddie Gray video has been arrested at gunpoint
- 4 How the language you speak changes your view of the world
- 5 Tory activist asked to step down after Labour candidate Rupa Huq is 'manhandled' while questioning Boris Johnson on the campaign trail
General Election 2015: Fishing is on Nigel Farage's mind as he casts a line to the disaffected of Grimsby
The man who filmed the Freddie Gray video has been arrested at gunpoint
Indonesia executions: Death row British grandmother Lindsay Sandiford will refuse to wear a blindfold when she faces firing squad
Oxygen-starved 'dead zones' with no marine life up to 100-miles long discovered in the Atlantic Ocean
Russian warships accused of 'chasing away' Swedish vessel to prevent Baltic States from achieving energy independence
Over 50,000 families shipped out of London boroughs in the past three years due to welfare cuts and soaring rents
EU asylum policy is 'a direct threat to our civilisation', says Nigel Farage
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: SNP and its activists 'openly racist' towards the English, Farage says
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
Schools forced to act as 'miniature welfare states' with teachers buying underwear and even haircuts for poor pupils
iJobs Money & Business
£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...
£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...
£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...
£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...