British American Tobacco (BAT) - 2010 - 1st 9-months..

October 28, 2010 - British American Tobacco’s (BAT) cigarette volumes during the nine months to the end of September, at 526 billion, were down by 1.3 per cent on those of the nine months to the end of September 2009.

British American Tobacco said Wednesday, October 27th that it sold 1 percent fewer cigarettes in the first nine months of the year compared to a year ago, but revenue rose thanks to favorable currency movements and the acquisition in August 2009 of PT Bentoel in Indonesia.

Although total volume fell, sales of its top brands — four Global Drive Brands – Dunhill, Kent, Lucky Strike and Pall Mall were up 8 percent. Volume sales of the company’s four Global Drive Brands grew by about eight per cent, an increase that was flattered by increased consumer purchases in Japan ahead of a significant excise driven price increase.

Organic volumes were about three per cent lower than they were last year as a result of market size declines and an increase in illicit trade in some markets. Volumes were also impacted by the loss of sales in Pakistan after the floods. (Organic growth is growth that comes from a company's existing businesses, as opposed to growth ... Inorganic growth · Mergers and acquisitions.)

Asia-Pacific volumes, at 141 billion, were up by 5.2 per cent; Americas volumes were down by 0.9 per cent to 110 billion; Western Europe volumes were down by 8.2 per cent to 90 billion; Eastern Europe volumes were down by 2.1 per cent to 93 billion; and Africa and Middle East volumes were down by 3.1 per cent to 92 billion.

The company reported that trading conditions continued to be challenging, with industry volumes markedly lower in a number of markets including Romania, Turkey, Pakistan, Germany and South Africa. In some markets, it said, there was down-trading to illicit products as a result of pressure on consumers’ disposable income, exacerbated by high excise increases. This particularly affected the low price segment.

Dunhill volumes were up by about 21 per cent, mainly as a result of brand migrations in Brazil and South Africa; Kent and Lucky Strike volumes each grew by about two per cent; and Pall Mall’s volumes increased by about seven per cent.

BAT reported that it had increased its overall market share across its top 40 markets.

“The challenging economic conditions, excise driven price increases and high unemployment have led to some softening of our volumes,” said chief executive, Paul Adams. “The recession’s impact on consumers is still with us and shows no signs of abating. “Despite this, we have increased market share in our largest markets, grown the Global Drive Brands and achieved good growth in revenue.

“We are on track for another year of good earnings growth.”

Reference: BAT says trading conditions still challenging, Tobacco Reporter, 10/27/2010