British American Tobacco plc Drops On 12% Fall In Revenue

But British American Tobacco plc (LON:BATS) remains confident of delivering consistent growth in earnings and aims to increase its dividend.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The share price of British American Tobacco (LSE: BATS) (NYSE: BTI.US) is currently down just over 1%, following publication of an interim management statement for the three months to 31 March 2014. At constant exchange rates group revenue was up 2%, but adverse currency movements in the company’s key markets resulted in a 12% fall in group revenue at current rates of exchange.

british american tobacco / imperial tobaccoThe company reported that it had “delivered an improved volume performance“, although the “improvement” only means that the rate of decline in cigarette sales has slowed a bit — at 158bn sticks, sales were down just 1% in the first three months of the year. The company attributes the improved performance to the “continued strong growth” of its five “Global Drive” brands  — Dunhill, Kent, Lucky Strike, Pall Mall and Rothmans — for which volumes rose 6.3% overall.

However, sales of fine cut tobacco were down 2.9%, with market declines in Italy, Spain and France only being partially offset by growth in Germany and Belgium. But the company reports that sales volumes of fine cut global brands Pall Mall and Lucky Strike actually grew.

BAT says that volumes in emerging markets, such as Bangladesh, Pakistan, Indonesia are increasing, but that the trading environment in Western Europe “remains challenging“. 

The company also reports that it resumed its share buy-back programme on 28 February 2014, and that during the three months to 31 March 2014, it bought 5.4 million shares at a cost of £175m (excluding transaction costs).

Commenting on the trading statement, Chief Executive Nicandro Durante said:

This is a good underlying performance, underpinned by an improving trend in volume. We have grown revenue at constant rates of exchange and our pricing remains on track. Our market share continued to grow, driven by the strength of our Global Drive Brands. Although foreign exchange remains an issue for reported results, it is a good start to the year. I remain confident of delivering consistent growth in earnings in constant currency terms, which we will recognise with an increase in the dividend.

At 3,450p BAT’s share price is down almost 3% on this time last year, compared with a 5.4% rise in the FTSE 100 over the same period. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Jon doesn't own shares in British American Tobacco.

More on Company Comment

Hand of person putting wood cube block with word VALUE on wooden table
Company Comment

Value has been building behind the Diageo share price

Despite the business growing, the Diageo share price first reached its current level just over 19 months ago and hasn't…

Read more »

Older couple walking in park
Investing Articles

5 stocks to buy for high and rising dividend income

I can see a host of shares to buy on the FTSE 100 offering me exceptional levels of income. Here…

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

I don’t care if FTSE 100 shares fall further, I’m buying them today

I'm happy to go shopping for FTSE 100 shares today, even though I accept that they could have further to…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

Rolls-Royce shares are down 18% in a month and I’m finally going to buy them

Investors who bought Rolls-Royce shares have been repeatedly disappointed, but I'm willing to take a chance on them before they…

Read more »

Storytelling image of a multiethnic senior couple in love - Elderly married couple dating outdoors, love emotions and feelings
Investing Articles

How I’d invest £10k in a Stocks and Shares ISA today

Now looks like a good time to buy cheap FTSE 100 shares inside a Stocks and Shares ISA. These are…

Read more »

Black father holding daughter in a field of cows
Investing Articles

Today’s financial crisis is the perfect moment to buy cheap shares

I'm building a portfolio of FTSE 100 stocks by purchasing cheap shares whenever I see an opportunity. There's a good…

Read more »

Long-term vs short-term investing concept on a staircase
Investing Articles

I’d buy Tesco shares in October to bag their 5.4% yield 

Tesco shares have fallen lately but I think this makes them attractively valued for a dividend stock I would aim…

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

I would do anything to hold Diageo in my portfolio (but I won’t do that)

Diageo is one of my favourite stocks on the entire FTSE 100 and I'd love to hold it, but one…

Read more »