BAT's annual profits hit by litigation charge and foreign exchange movements
British American Tobacco (BAT) reported a drop in annual profit from operations as the cigarette maker was it by a non-tobacco litigation charge and foreign exchange movements.
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Profit from operations, at current rates of exchange, was 17.7% lower at £4.5bn, mainly reflecting the $575m legal settlement with Flintkote over dividend payments and asbestos claims.
US company Flintkote, which formerly sold products containing asbestos, sued BAT’s Canadian subsidiary in 2006 over issues stemming from its acquisition of Genstar Corp., Flintkote’s parent company.
BAT's group revenue was up by 2.8% to £13.9bn at constant rates of exchange but reported revenue was 8.4% lower at £15.6bn, as a result of adverse exchange rate movements.
Operating margin, at current rates of exchange, increased by more than 50 basis points to 38.7%.
Group cigarette volume dropped 1.4% to 667bn, against an estimated industry decline of 2.5%. Total tobacco volume was 1.3% lower.
The group recommended a final dividend of 100.6p, taking the 2014 total dividend to 148.1p per share, marking a 4% rise.