Lucky Strike Maker Announced Shipments Decrease

December 15th, 2014 00:00
BAT tobacco

British American Tobacco (BAT), Europe’s giant producer of tobacco products, revealed an extra decrease in shipments as cigarette smokers reduce and stated the weakness of currencies in numerous of its markets resulted in a slip in earnings.

The volume of products sold dropped by 1 % within nine months ended September 2014, London-based BAT announced yesterday. That in contrast to the average estimation of 10 industry experts surveyed by Bloomberg News for a 0.9 % decline. Profit dropped by 9.6 %, and went up less than forecasted excluding currency changes.

A long lasting decrease in cigarette use and the weakness of foreign currencies like the Brazilian real and Russian ruble towards the pound are weighing on BAT. That has being only to some extent compensated by price boosts and amplified market share for such cigarette brands as Lucky Strike and Pall Mall. “A 12 % currency headwind is wakening for companies which can’t develop in fully developed markets,” Chris Wickham, an expert at Oriel Securities in London, explained in an e-mail.

BAT shares dropped up to 4.2 % in early London trading, one of the most since June 2013. Volume decreased in Brazil, Vietnam, Russia, Poland and Canada, the manufacturer of the Dunhill cigarette brand stated, compensating increase in markets like the Middle East and Pakistan. Price boosts suggested sales went up by 2.4 %, eliminating currency changes, missing the median prediction for 3.2 % increase. “The trading environment continues to be challenging because of maintaining pressure on consumer extra income globally and the slow economic recuperation in Western Europe,” BAT added. “Industry volume has dropped at a lesser rate than previous year however is being influenced by substantial excise-driven price boosts.”

In opposition to this type of backdrop, Chief Executive Officer Nicandro Durante mentioned the company is “on course to provide one more year of good revenue increase at persistent rates of exchange.”

BAT’s four global key brands are- Dunhill, Kent, Lucky Strike and Pall Mall have raised in volume by  approximately 6.2 % after taking an amplified share of their major markets. BAT announced in July about it plans to invest about $4.7 billion in order to  keep its 42 % stake in Reynolds American after Reynolds accomplishes its obtain of Lorillard subject to authorization by government bodies.

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