Interim Management Statement

RNS Number : 1457R

British American Tobacco PLC

23 October 2013

 



 23 October 2013

BRITISH AMERICAN TOBACCO p.l.c.

INTERIM MANAGEMENT STATEMENT FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2013

GOOD UNDERLYING PERFORMANCE CONTINUED

·      Good revenue growth of 3.5% at constant rates of exchange

·      Revenue growth of 0.7% at current rates of exchange

·      Cigarette volume from subsidiaries decreased by 3.2% to 501 billion

·      Total tobacco volume was down by 3.0%

·      Global Drive Brand cigarette volume grew by 1.9%

Nicandro Durante, Chief Executive, commented: "The Group continued its good performance against a backdrop of adverse exchange rate movements, lower industry volume and instability in some parts of the world. We have grown revenue and market share, our pricing momentum remains strong and our Global Drive Brands continue to perform well. During the period, the Group launched its first next generation product, Vype, and early signs are encouraging. We remain on track for a year of solid earnings growth."

SUMMARY OF PERFORMANCE

Trading update

British American Tobacco performed well in the nine months to the end of September 2013 with continued growth in revenue, market share and the Global Drive Brands. The Group's reported results were adversely impacted by exchange rate movements. Volume was lower than last year as a result of industry volume declines, excise-driven trade inventory movements in Brazil and the leap year comparator.

Group revenue for the nine months, at constant rates of exchange, grew by 3.5%, driven by strong pricing. At current exchange rates, revenue grew by 0.7%, as movements in some of the Group's key trading currencies continued to adversely impact reported revenues.

Cigarette volume from subsidiaries was 501 billion, down by 3.2%, with underlying cigarette volume declining 2.4%. Growth in many markets, including Bangladesh, Pakistan, Vietnam, the Middle East and the Philippines, was more than offset by lower volumes in Brazil, Russia, Turkey, Ukraine, Egypt and Western Europe.

Global Drive Brands' cigarette volume was up by 1.9%, with their market share growing strongly in the Group's Top 40 markets. Dunhill volume increased by 9.6%, with good growth in Indonesia, South Korea and the GCC. Kent was 4.0% lower, driven by market declines in Russia, Romania and Ukraine. Lucky Strike volume was down by 5.3%, with increases in the Philippines, Brazil and Poland, more than offset by market declines in Spain and lower volume in the Middle East. Pall Mall was up by 5.2%, largely as a result of growth in Pakistan, Romania, Chile and Argentina, partially offset by declines in Russia, Uzbekistan, Germany and Spain.

Other tobacco products performed well, with Fine Cut tobacco growing, driven by a 3.3% increase in Western Europe. Pall Mall, the biggest Fine Cut brand in Western Europe, was up by 10.7% with growth in Belgium, Spain, France, Italy and Germany. Total tobacco volume (including cigarettes) was 3.0% lower at 521 billion.

Trading environment

Despite industry volume declining and difficult trading conditions persisting in some parts of the world, the pricing environment remains strong. Exchange rate movements are adversely affecting the reported results.

Cigarette volumes

The segmental analysis of the volumes of subsidiaries was as follows:

	9 months to 30.09.13			9 months to 30.09.12			Year to 31.12.12
	bns			bns			bns
Asia-Pacific	149			141			188
Americas	97			104			142
Western Europe	87			95			129
EEMEA		168			177			235
		501			517			694
Total tobacco volumes		521			537			722

SHARE BUY-BACK PROGRAMME

The Group resumed an on-market share buy-back programme from the end of February 2013. During the nine months to 30 September 2013, 31.4 million shares were bought at a cost of £1,095.9 million, excluding transaction costs.

FINANCIAL POSITION

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, a new US$300 million bond with a maturity of 2016 and a new £650 million bond with a maturity of 2026. These issues were in anticipation of the repayment in July 2013 of a €519 million bond and the repayment in November and December 2013 of a US$300 million and a £152 million bond respectively.

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 22 October 2013, being the latest practicable date before the date of the publication of this Interim Management Statement.

On behalf of the Board

Nicola Snook

Secretary

22 October 2013

NOTES AND ADDITIONAL INFORMATION

British American Tobacco is the world's second largest quoted tobacco group by global market share, with brands sold in more than 180 markets. We have four Global Drive Brands - Dunhill, Kent, Lucky Strike and Pall Mall - and over 300 brands in our portfolio. We hold robust market positions in each of our regions and have leadership positions in more than 50 markets.

Disclaimers

This Interim Management Statement (IMS) relates to the nine months ended 30 September 2013 and contains information that covers the nine months and the period since the third quarter end to 22 October 2013, being the latest practicable date before the date of the publication of this IMS.

This announcement does not constitute an invitation to underwrite, subscribe for, or otherwise acquire or dispose of any British American Tobacco p.l.c. shares or other securities.

This IMS contains certain forward looking statements which are subject to risk factors associated with, among other things, the economic and business circumstances occurring from time to time in the countries and markets in which the Group operates. It is believed that the expectations reflected in this announcement are reasonable but they may be affected by a wide range of variables which could cause actual results to differ materially from those currently anticipated.

Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser.

Distribution of this Interim Management Statement (IMS)

The IMS is released to the London Stock Exchange and the JSE Limited. It may be viewed and downloaded from our website, www.bat.com

Copies of the IMS may also be obtained during normal business hours from: (1) the Company's registered office; (2) the Company's representative office in South Africa; and (3) British American Tobacco Publications, details of which are given below.

FINANCIAL CALENDAR 2014

27 February          Preliminary Statement

30 April                 Annual General Meeting and Interim Management Statement

30 July                   Half-Yearly Report

22 October            Interim Management Statement

CORPORATE INFORMATION

Premium listing

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Publications

British American Tobacco Publications

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Computershare Investor Services (Pty) Ltd in South Africa using the contact details shown above.

British American Tobacco p.l.c.

Registered office

Globe House

4 Temple Place

London

WC2R 2PG

tel: [phone]

British American Tobacco p.l.c. is a public limited company which is listed on the London Stock

Exchange and the JSE Limited in South Africa. British American Tobacco p.l.c. is incorporated in

England and Wales (No.3407696) and domiciled in the UK.

British American Tobacco p.l.c.

Representative office in South Africa

34 Alexander Street

Stellenbosch

7600

South Africa

(PO Box 631, Cape Town 8000, South Africa)

tel: [phone]

ENQUIRIES:

INVESTOR RELATIONS:                                                                PRESS OFFICE:

Mike Nightingale       020 7845 1180                                       Will Hill/Annie Brown    020 7845 2888

Rachael Brierley        020 7845 1519

 

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