Buoyant BAT expects good news on US cigarette taxes

ANY excise duty imposed on US cigarettes by the Clinton administration will be lower than forecast, Sir Patrick Sheehy, BAT Industries chairman, predicted yesterday.

He said that the duty increase would probably be less than the 75 cents-a-packet proposed by President Clinton - equivalent to an average 50 per cent price rise - and would be phased in over a period of up to three years.

BAT reported a 5 per cent rise in half-year pre-tax profits to pounds 948m. Last year's figures included a pounds 135m profit on an exchange of brands with American Tobacco while there was a pounds 56m gain on a disposal. The interim dividend rose 8 per cent to 8.5p.

Excluding the brand swap gains, tobacco profits rose 8 per cent to pounds 576m despite a slump in Brazil from an pounds 80m profit to break-even. Prices in the US market have stabilised following the price war instigated last year by Philip Morris and higher-margin exports rose 17 per cent.

'We have been subjected to a period of unprecedented propaganda in the US. The board, however, remains confident of the tobacco industry's ability to continue to defend itself successfully, not only in court, but wherever a more balanced view is taken.'

Profits from financial services rose 10 per cent to pounds 439m. Eagle Star's profits improved from pounds 45m to pounds 69m with a reduction in underwriting losses from pounds 97m to pounds 16m partly offset by lower investment returns. Allied Dunbar profits rose 14 per cent to pounds 84m. Profits from Farmers were flat at pounds 252m.

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