British American Tobacco [JSE:BTI] on Thursday reported a 15% rise in adjusted diluted earnings per share to 175.7 pence for the year ended December 2010 from 153.0 pence a year ago. This was principally as a result of the growth in profit from operations and favourable exchange movements, the company said.
Group revenue grew by 5% to £14.9bn as a result of the continued good pricing momentum, the acquisition of PT Bentoel Investama Tbk made in June 2009 and the favourable impact of exchange rate movements. Organic group revenue was up 3% at constant rates of exchange.
Group profit from operations was 5% higher at £4.3bn, while adjusted profit from operations was 12% higher and would have been up 6% at constant rates of exchange. Group volumes were £708bn, down 2% mainly due to industry declines. However, overall market share in the group’s top 40 markets increased.
BAT said its four global drive brands achieved good overall volume growth of 7%, with Dunhill up 18%, Lucky Strike 2% and Pall Mall growing by 8%, while Kent volumes fell 1% due to industry declines in its main markets.
The board recommended a final dividend of 81 pence, payable on May 5. The total dividend in respect of 2010 is 114.2 pence, an increase of 15%.
The group also announced a share buy-back of £750m in the period.
“This has been a good year for your company in spite of difficult trading conditions. The global economic climate has affected consumer spending in many parts of the world, but the inherent strength of your company’s business, with its worldwide reach to emerging and developed markets, its balanced portfolio of brands and its consistent focus on innovation, continues to deliver impressive results and sustained shareholder value,” said chairperson Richard Burrows.
Profit from the Africa and Middle East region grew by £134m to £858m in 2010. At constant rates of exchange, profit would have improved by £69m, or 10%, mainly driven by Nigeria and the Gulf Co-operation Council (GCC), British American Tobacco said. Volumes were 2% lower at £124bn, following declines in Turkey, Iran and SA. However, these were partially offset by increases in the GCC, Egypt and Nigeria.
In SA, market share grew following strong performances by Peter Stuyvesant and Kent, aided by the successful migration of Courtleigh to Dunhill. “Volumes were down after an almost doubling of illicit trade. However, the profit impact of this was mitigated by increased pricing and cost reduction initiatives, helped by a stronger exchange rate,” BAT said.
Dunhill increased volumes by 18% in 2010, mainly as a result of brand migrations in Brazil and SA and strong growth in the GCC, Russia, France, Nigeria and Indonesia.
CE Paul Adams was set to retire at the end of February 2011, following seven years in that role. He would be replaced by Nicandro Durante.
“British American Tobacco remains in very good shape at the end of 2010. We have increased our competitiveness by growing our share in key markets and improving our cost base. There will be further global economic challenges ahead but we can see strong opportunities for growth too. That’s why I am confident we can continue to deliver superior shareholder returns in 2011 and beyond,” Burrows said.