British American Tobacco profit beats expectations but revenue hit by currency moves
British American Tobacco posted a rise in first-half profit, although revenue for the period was dented by currency moves.
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The company, which owns Dunhill and Lucky Stripe, said net profit for the year to 30 June came in at £2.65bn, up from £1.75bn and better than consensus expectations for £2.44bn. Cigarette volume was down 2.9%.
BAT will pay an interim dividend of 49.4p, up from 47.5p last year.
However, revenue for the period dropped 5.9% to £6.4bn, hit by adverse exchange rate movements. At constant rates of exchange, however, revenue was up 2.4%, driven by good pricing, the company said.
Chairman Richard Burrows said: "As we anticipated, the first half of the year has been impacted by adverse exchange rate movements and a strong first half volume comparator. The underlying performance of the business remains strong and we are confident that we are on course to deliver an improved second half, leading to another year of good earnings growth at constant rates of exchange.
"Underscoring our commitment to growing shareholder returns we intend to reflect this good underlying performance with an increase in the full year dividend."
Charles Stanley said: “BAT remains on track for another good year of earnings growth in 2015 (at constant FX), helped by strict cost management, easing comps and the incremental benefits of recent M&A starting to come through.”
The brokerage, which rates the stock at ‘accumulate’, said BAT was a core holding for long-term income-oriented investors. It said the company benefits from a resilient business model with well-recognised defensive characteristics, strong brands, emerging-market leadership, an attractive dividend yield and solid cash generation.
At 14:01, shares were up 3% at 3,659p.