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BAT Revenue Misses Analysts’ Estimates on Delayed Pricing

British American Tobacco Plc (BATS), Europe’s biggest cigarette maker, reported first-quarter sales growth that missed analyst predictions as price increases were delayed.

Revenue at constant exchange rates rose 2 percent in the three months through March 31, the company said today in a statement. That compares with the 4 percent median growth estimate of 11 analysts surveyed by Bloomberg.

Price increases will be weighted to the second half, the company said. BAT has been raising prices on its brands, which include Lucky Strike and Dunhill, to offset weaker consumption. It’s also battling stricter government rules on smoking. The U.K. plans to require plain tobacco packaging as early as next year, while European lawmakers have increased the size of health warnings on cigarette packs and banned flavored tobacco.

Cigarette volumes sold by subsidiaries fell 1 percent, BAT said, compared with the average analyst prediction for a 2.3 percent drop. Total tobacco volume fell 1.1 percent.

BAT stock dropped as much as 1.9 percent and traded at 3,443 pence a share as of 8:04 a.m. in London. The shares have advanced 6.2 percent this year.

BAT owns 42 percent of Reynolds American Inc. (RAI), the Camel cigarette maker that investors speculate may make a bid for Lorillard Inc., whose brands include Newport menthols. BAT could help finance such a purchase, analysts at Exane BNP Paribas have said. A standstill agreement barring BAT from increasing its 42 percent stake in Reynolds ends in July.

Speculation about acquisitions comes as tobacco companies grapple with declining smoking rates, higher sales taxes and a shift toward electronic cigarettes.

To contact the reporters on this story: Clementine Fletcher in London at; Gabi Thesing in London at

To contact the editors responsible for this story: Celeste Perri at John Bowker

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