BATs hit as smokers struggle in downturn

cigarettes British American, the maker of Dunhill cigarettes, Kent, and Lucky Strike cigarettes, said volumes fell in the third quarter as the economic downturn forced smokers to cut back.

The world’s second biggest cigarette maker reported a 1pc decline in volumes to 526bn, with Europe, the US, Africa and the Middle East hardest hit.

Organic volumes were 3pc lower than last year as a result of market size declines and an increase in illicit trade in some markets. Volumes were also impacted by the loss of sales in Pakistan after the floods.

BAT’s Asia-Pacific region, which survived the Great Recession relatively unscathed, was the only area where volumes grew – up from 134bn to 141bn. The Asia-Pacific is the company’s largest market by volume.

Paul Adams, the chief executive, said in a nine-month trading update: “The challenging economic conditions, excise driven price increases and high unemployment have led to some softening of our volumes. The recession’s impact on consumers is still with us and shows no signs of abating.”

Despite this, he said the company has increased market share in its largest markets and achieved good growth in revenue, helped by price rise, favourable exchange rates and the purchase of PT Bentoel in Indonesia in June 2009.

“We are on track for another year of good earnings growth,” he said.

Its top four global brand volumes rose 8pc helped by trade stocking up ahead of an excise duty rise in Japan.

The company did not give a figure for nine-month revenue. BATs shares fell 1.4pc to £24.04 in early trading on Wednesday.


Similar Posts:

If you enjoyed this post, make sure you subscribe to my RSS feed!