British American Tobacco FY13 Profit Rises; To Buy Back Up To GBP 1.5 Bln Shares

(RTTNews) - British American Tobacco Plc (BTI, BATS.L) reported Thursday a higher profit in its fiscal 2013, benefited by strong margin growth and solid pricing, despite currency headwinds and industry volume declines. Further, the company announced higher dividend, and the approval of an on-market share buy-back programme for up to 1.5 billion pounds.

Looking ahead, CEO Nicandro Durante added that the tobacco company will continue to outperform the markets in the year ahead.

For the full year, pre-tax profit was 5.80 billion pounds, compared to last year's 5.59 billion pounds. The prior year results have been restated to take account of the revised IAS 19 Employee Benefits.

Adjusted earnings per share, which excluded certain items, were 216.6 pence, compared to 205.2 pence a year ago.

For the year, adjusted profit from operations was 5.82 billion pounds, compared to 5.64 billion pounds a year earlier.

Operating margin grew strongly by 100 basis points to 38.1 percent, thanks to efforts to address cost base, to standardise systems and deliver productivity savings year on year, the company said.

Full-year revenue edged up to 15.26 billion pounds from last year's 15.19 billion pounds, with exchange rate movements which negatively impacted three of the firm's four regions. At constant rates of exchange, group revenue was up 4 percent, mainly because of continued good pricing.

In the year, total tobacco volume was 2.6 percent lower, mainly due to weak industry volume in Western Europe and some key Group markets. Group cigarette volume from subsidiaries was 676 billion, down 2.7 percent from the previous year.

The company said its cigarette market share in its key markets was higher with growth of 20 basis points, while the share in the premium segment grew by 80 basis points.

International brands grew volume by 2.1 percent, of which Global Drive Brands, comprising Dunhill, Kent, Lucky Strike and Pall Mall, grew 1.9 percent.

Commenting on the results, Chairman Richard Burrows said, "Difficult trading conditions persist in some parts of the world, notably southern Europe, but these results demonstrate that the Group's strategy continues to deliver robust profit and dividend growth."

The company's board has recommended a final dividend of 97.4 pence, taking the 2013 total dividend to 142.4 pence per share, an increase of 6 percent.

Looking ahead, the company noted that challenges persist in 2014, adding that the economic recovery is still fragile, particularly across southern Europe.

"However, we have shown a consistent ability to improve our operating margin and grow market share. The pricing environment also remains good, " Durante added.

In London, British American Tobacco shares are currently trading at 3,197.50 pence, up 23.50 pence or 0.74 percent.