British American Tobacco Plc, Europe’s largest cigarette maker, reported first-half profit growth that missed analysts’ estimates as tax increases in Turkey and Australia weighed on sales volume.
Net income rose to 1.53 billion pounds ($2.4 billion), or 76.5 pence a share, from 1.45 billion pounds, or 72.8 pence, a year earlier, London-based BAT said today in a statement. The average estimate of six analysts surveyed by Bloomberg was 1.7 billion pounds. Sales gained 7.6 percent to 7.3 billion pounds.
Turkey increased taxes on cigarettes by 29 percent at the end of 2009 as part of a package of measures to reduce the government budget deficit. Australia raised its tax by 25 percent on April 30 under a program to discourage smoking that will also include an eventual ban on cigarette brand names.
First-half cigarette volume fell 3 percent, excluding the effects of takeovers or disposals, on lower shipments to Romania, Turkey, Japan and Pakistan, BAT said. That was an improvement on the first quarter’s 4 percent decline. The economic slowdown and rising unemployment have led smokers to buy fewer premium cigarettes, the company said in April.
Total volume were in line with last year at 348 billion, boosted by the takeover of Indonesian clove-cigarette maker PT Bentoel Internasional Investama. BAT, which owns the Dunhill, Lucky Strike, Pall Mall and Kent brands, has made more than $5 billion in acquisitions during the seven-year term of Chief Executive Officer Paul Adams, who retires in February.
“These results show that British American Tobacco’s business is in very good shape, with continued pricing momentum, increasing market share in key markets and improving organic volume trends,” Chairman Richard Burrows said in the statement. “While the comparisons with 2009 will become tougher in the second half, shareholders should see another year of good growth in both earnings and dividends.”
BAT said it plans to raise the first-half dividend by 19 percent to 33.2 pence a share.
BAT shares have gained 12 percent this year, outperforming Bristol, England-based Imperial Tobacco Group Plc, which has declined 7.1 percent, and Philip Morris International Inc., the largest publicly traded tobacco company, which has increased 6.5 percent in New York Stock Exchange composite trading.