British American Tobacco Plc, Europe’s largest maker of cigarettes, reported a further decline in shipments as smokers cut back from Russia to Brazil.
The quantity of products sold fell 3 percent in the nine months ended Sept. 30, the London-based company said today in a statement, compared with the median estimate of eight analysts surveyed by Bloomberg News for a 2.9 percent drop.
Volume declined in Brazil, Russia, Turkey, Ukraine, Egypt and western Europe, the maker of the Pall Mall and Dunhill brands said. Increased prices for BAT’s cigarettes meant sales rose 3.5 percent, excluding currency shifts, compared with the median prediction for 4 percent growth.
“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” and remains “on track for a year of solid earnings growth,” Chief Executive Officer Nicandro Durante said in the statement.
The shares fell as much as 1 percent to 3,350 pence and were down 0.6 percent at 3,364.5 pence at 8:48 a.m. in London.
BAT’s four global “drive brands” -- Dunhill, Kent, Lucky Strike and Pall Mall -- increased volume by 1.9 percent as they took an increased share in their top 40 markets.
In addition to declining cigarette consumption, volume in the period was affected by comparison with a leap year and an excise-tax increase in Brazil late last year, BAT said.
“Despite the slight miss” on sales, “we believe the results do little to change the buy case,” Bank of America Merrill Lynch analyst Nik Oliver said in a note to investors.
Currency movements cut reported revenue growth to 0.7 percent in the nine-month period. After reducing sales growth by 2.8 percentage points in the nine months, most analysts anticipate a 5 percentage-point reduction for the year, said Chris Wickham, an analyst at Oriel Securities in London.
CEO Durante said early signs for Vype electronic cigarettes are “encouraging.” BAT is stepping up the development of alternative nicotine products amid stricter government constraints on smoking. It started selling the Vype brand in the U.K. in June and expects to sell an aerosol-based device as early as next year, pending approval.