Falling tobacco sales burn out BAT price hikes

PRICE rises from British American Tobacco (BAT) have failed to stem the effects of falling cigarette sales this year, as the FTSE 100 firm saw turnover fall in the last nine months. The company, which makes the Lucky Strike, Dunhill, Kent and Pall Mall brands, said tax hikes in Brazil and currency fluctuations were to blame for the one per cent fall in revenue in the year to date.

BAT also said declining sales in Japan had been a big factor. However, BAT’s four main brands continued to do very well, with Lucky Strike volume sales rising 14 per cent on the same nine-month period last year. Chief executive Nicandro Durante said: “Economic recovery remains fragile this year and difficult trading conditions persist in many parts of the world. “However, pricing remains strong, we are growing underlying market share and our global drive brands continue to perform well.”

Shares in the world’s second-largest tobacco firm stayed fairly flat yesterday, as the company’s results were largely as expected and reflected a trend seen in much of the rest of the industry. “The decline is attributable to reduced industry volumes and a tough comparative period, and the company expects a better volume performance in the next quarter,” said tobacco analyst Damian McNeela at Panmure Gordon.

BAT said it has seen the biggest growth in Bangladesh, Vietnam and Pakistan and had benefited from its $452m (£282m) purchases of Colombian cigarette maker Protabaco, but that this was offset by the falls in Japan and Brazil, as well as Italy, Turkey and Egypt. Revenue was four per cent up when currency changes were stripped out.