Interim management statement for the three months ended 31 March 2013
25 April 2013
Nicandro Durante, Chief Executive, commented: “This is a good performance against a backdrop of fragile economic conditions persisting in many parts of the world. We have grown revenue, our pricing momentum remains strong and our Global Drive Brands continue to perform well. It is a good start and I remain confident of another year of earnings growth in line with our long term strategic goals.”
British American Tobacco performed well in the three months to the end of March 2013 with continued growth in revenue and Global Drive Brands. Market share grew strongly in the Group’s Top 40 markets, although volumes were lower than last year as a result of the adverse impact of excise-driven trade inventory movements in Brazil, the leap year comparator and industry volume decline.
Group revenue for the three months, at constant rates of exchange, grew by 5%, driven by a strong pricing environment. At current exchange rates, revenue grew by 1%, as movements in some of the Group’s key trading currencies adversely impacted revenues.
Cigarette volumes from subsidiaries were 160 billion, down 3.7%, with growth in many markets, including Bangladesh, Pakistan and Vietnam, more than offset by lower volumes in Brazil, as a result of trade inventory movements, the leap year comparator and market declines in southern Europe.
The four Global Drive Brands’ cigarette volumes were up by 1%, with their market share growing strongly in the Group’s Top 40 markets. Dunhill volumes increased by 5%, with good growth in Indonesia, the Middle East and South Korea, partially offset by declines in Brazil. Kent was 7% lower, driven by market declines in Russia and Japan. Lucky Strike volumes were down by 9%, with increases in Germany, Poland and Italy, more than offset by market declines in Spain and lower volumes in the Middle East. Pall Mall was up by 9%, largely as a result of growth in Pakistan, Chile, Canada and Italy, partially offset by declines in Uzbekistan and Spain.
Other tobacco products performed well, with Fine Cut tobacco growing strongly, driven by a 9.5% increase in Western Europe. Pall Mall, the biggest Fine Cut brand in Western Europe, was up by 21.2% with growth in Spain, France, Italy and Belgium.
The pricing environment remains strong despite difficult trading conditions in many parts of the world, notably southern Europe. If current exchange rates persist for the rest of the year, the currency headwind that adversely impacted the quarter will reverse.
The segmental analysis of the volumes of subsidiaries was as follows:
3 months to
3 months to
The Group resumed an on-market share buy-back programme from 1 March 2013. During the three months to 31 March 2013, 3.5 million shares were bought at a cost of £123.5 million, excluding transaction costs.
The Group has sufficient financing and facilities available for the foreseeable future.
The changes in the financing arrangements of the Group since the beginning of the financial year were the issue in March of a new €650 million bond with a maturity of 2025, and a new US$300 million bond with a maturity of 2016. These issues were in anticipation of the repayment of bonds that will expire later in 2013 and the beginning of 2014.
There have been no material events, transactions or changes in the financial position of the Group since the year end, other than as outlined in this statement. Further, the Board is not aware of any material events, transactions or changes in the financial position of the Group which have occurred up to and including 24 April 2013, being the latest practicable date before the date of the publication of this Interim Management Statement.
On behalf of the Board
24 April 2013