British American Tobacco Highlights of 1Q 2011 Performance

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Nicandro Durante, recently appointed BAT CEO said that British American Tobacco showed a strong performance in the first quarter of 2011, with the market share of the global drive brands going up by 9 percent and the rate of the organic volume decrease slowing down. He mentioned that the innovative processes applied by the company allow growing market share in the top markets the company is presented it. On the same time, subsidiary volumes were down by 2.4 percent, equaling 164 billion, with organic volumes decreased by 1.8 percentage points.

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Highlights of Performance

British American Tobacco performed strongly during the first three months to April 1st, achieving organic volume increase. The organic sale volume went up by 5 percent in the first quarter in permanent currency terms, demonstrating positive pricing environment. Estimated revenue at both present and constant rate was in line with previous year, which mostly resulted from the sale of Lyfra, the end of Gauloises Blondes in Germany, and cessation of the promotion programs in Brazil, all taking place in 2010.

Overall volumes from subsidiaries totaled 164 billion, declining by 2.4 percent compared to the same period in 2010, whereas organic volumes declined by 1.8 percent. The industry volumes decreased considerably in such markets as Spain, Australia and Mexico.

Nevertheless, BAT managed to increase market share in these markets. The company’s Global Drive Brands (Pall Mall, Dunhill, Lucky Strike and Kent) showed a very strong performance achieving 9 percent volume growth and share increase in several major markets.

Kent achieved 16 percent growth, contributed by share growth in South Korea, Russia, Ukraine and Romania. Dunhill share rose by 6 percent due to growth in Russia, Brazil, Romania and Taiwan. Pall Mall showed a double-digit growth as well due to great performance in Turkey, Romania and Pakistan. Lucky Strike also performed well, despite volume cut in Spain.

Trading Conditions

The strong performance was reached in trading environment which is still challenging, with industry volumes falling in several markets. Nevertheless, British American Tobacco innovative strategy contributed to the market share increase in all regions the company is presented. The Group achieved shipments growth in Japan, where the trading conditions remain significantly challenging after the massive earthquake and tsunami. The company continues to improve its cost base and applies other initiatives, such as closing facilities in Europe and downsizing factories in Australia, in order to balance its expenses.

Financial Position

The company has not scheduled any material events, significant transactions and financial position changes since the end of the previous year, other than mentioned in the present statement.

In addition, the Group established Nicoventures Limited, to offer adult smokers a wide range of alternative products that will provide most of the experience they get from cigarette smoking, but without significant health dangers.

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