BAT Full-Year Profit Gains 3% on Increased Cigarette Prices

British American Tobacco Plc (BATS), Europe’s largest cigarette maker, reported a 3 percent gain in full-year profit after raising prices amid weaker consumption. Adjusted operating profit climbed to 5.82 billion pounds ($9.7 billion) in 2013 from 5.64 billion pounds in 2012, the London-based maker of the Lucky Strike brand said in a statement today. Analysts had anticipated 5.78 billion pounds, according to the average of 12 estimates compiled by Bloomberg. BAT’s price rises have also helped to combat stricter government restrictions on smoking. European lawmakers yesterday expanded warnings on cigarette packages and banned tobacco flavorings, while the U.K. government is re-examining the introduction of plain pack cigarettes. “Difficult trading conditions persist in some parts of the world, notably southern Europe, but these results demonstrate that the group’s strategy continues to deliver robust profit and dividend growth,” BAT Chairman Richard Burrows said in the statement. BAT rose as much as 2.1 percent to 3,240 pence in London trading and was up 1.4 percent at 8:48 a.m. The cigarette maker raised the dividend for the year by 6 percent to 142.4 pence a share. BAT shares have fallen 16 percent since mid-May, weighed down by currency fluctuations, slowing emerging-market economies and government clampdowns on tobacco companies, according to Erik Bloomquist, an analyst at Berenberg Bank in London.

Vype e-Cigarette

BAT is addressing some of those concerns by investing in new-generation products such as the Vype e-cigarette, introduced in July. It’s also awaiting regulatory approval for a product known as Voke, which uses asthma inhaler technology to deliver a nicotine hit and could reach the market as soon as this year. While currency movements will continue to pose difficulty this year, “tobacco is a resilient product,” said Oriel Securities analyst Chris Wickham. “The commitment to its drive brands should continue to underpin pricing while volumes should not be overly affected” by slowing economies. To contact the reporter on this story: Gabi Thesing in London at gthesing@bloomberg. Source :  http://www.bloomberg.com/news/2014-02-27/bat-full-year-profit-advances-3-on-increased-cigarette-prices.html