British American Tobacco PLC on Thursday said first-half profit rose by 15 percent on higher prices, increased sales of premium brands and a 134 million pound (US$265 million) benefit from foreign exchange.
The world's no. 2 tobacco company made net profit of 1.34 billion pounds (US$2.66 billion) compared with 1.17 billion pounds (US$2.31 billion) in the first half of 2007, the company said in a statement.
In the second-quarter, profit increased 11 percent from 630 million pounds (US$1.248 billion) to 697 million pounds (US$1.380 billion). Sales rose 17 percent from 2.493 billion pounds (US$4.937 billion) to 2.916 billion pounds (US$5.775 billion) in the three months ending June 30.
First half sales climbed 15 percent to 5.46 billion pounds (US$10.8 billion).
The company's comments focused mainly on the six-month results. Chairman Jan du Plessis said in a statement the improvement was driven in part by a 134 million pound (US$265 million) benefit from changes in foreign exchange rates and charging more for the company's products. Sales of the company's premium brands — their most expensive, which include Dunhill, Kent and Lucky Strike — grew by 7 percent, he said.
Sales volume for the global brands, comprising those three and Pall Mall, grew by 20 percent, around a third of which came from brand migrations, such as the migration of Benson & Hedges to Kent in South Africa.
BAT also said it had completed two acquisitions announced in February. It bought the cigarette assets of Tekel, the Turkish state-owned tobacco business, for 866 million pounds (US$1.715 billion) on June 24. And it also acquired on July 2 the privately held Danish Skandinavisk Tobakskompagni in exchange for its 32.35 percent stake in ST and 1.15 billion pounds ($2.3 billion) in cash. Neither of these acquisitions had any impact on first-half profit, the company said.
"While not immune from the consequences of an economic slowdown, we can certainly look to the future with more confidence than most," said du Plessis.
BAT shares rose 0.80 percent to 1,881 pence (US$37.25) in London trading.
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On the Net: http://www.bat.co.uk/
