BAT sales soar but weak dollar hits profit

Click to follow
The Independent Online

British American Tobacco yesterday saw its profits affected by the weakness of the US dollar, but defied critics over its major purchase in Italy.

British American Tobacco yesterday saw its profits affected by the weakness of the US dollar, but defied critics over its major purchase in Italy.

BAT, which owns cigarette brands including Lucky Strike, Pall Mall and Dunhill, was accused of overpaying for the Italian state tobacco group ETI when it spent £1.5bn on the business last year. Out of first quarter operating profits in Italy of £43m, the ETI businesses contributed £38m.

But the impact of currency rates on the global business, many of which are pinned to the dollar, could not be escaped. BAT yesterday said profits over the first quarter of 2004 were down 3 per cent to £454m, despite a 36 per cent rise in sales to £7.5bn and a growth in volumes of 5 per cent to 192bn cigarettes.

"We expect our real momentum to continue, although these results clearly demonstrate the extent to which good progress can be masked by the impact of the strength of sterling on the translation of our profits," BAT's outgoing chairman, Martin Broughton, said. The group warned that forecasts would be difficult for 2004.

In contrast with shrinking sales in North America, BAT is expanding in areas such as Russia, Malaysia and Pakistan.

The company also yesterday shrugged off fears of a dent to its success from further smoking bans around the world. New York recently brought in a smoking ban in public places, as has Ireland, and pressure is growing for a similar ban in the UK. Mr Broughton yesterday sought to reiterate his broad swipe at anti-smoking regulation, saying it was heavy handed.

The company is also set for a court showdown later this year in the US, where the Department of Justice is suing a number of tobacco companies for alleged racketeering. BAT denies the allegations and yesterday said it was confident of winning the case.

Comments