British American Tobacco (BAT) revealed greater earnings for 2013 as sales of its major brands persisted to increase and it succeeded to increase prices, even though negative exchange rate actions have affected the profit progression.
The world’s second giant cigarette manufacturer by profit after Philip Morris International (PMI) announced pretax revenue of GBP5.80 billion for the year, higher from GBP5.59 billion in previous year, as profits boosted to around GBP15.26 billion, from GBP15.19 billion, and it additionally raised margins by means of cost cutting.
Mentioning the effect of currency moves, the company stated its profits were practically plain at present rates, however would have been higher 4% if foreign currencies had continued to be stable around the year. Revenue from operations has boosted by 3% at recent rates. It was specially affected by sterling’s weakness against the Brazilian real, South African rand, Japanese yen and Australian dollar.
BAT’s story has been identical for many years: stable revenue growth as it concentrates on promoting growth of its key brands in Asia and some other growing markets and decreasing costs, compensating ongoing decreases in sales in the majority of emerging markets and in entire cigarette sales volumes.
2013 demonstrated similar results. It once again boosted the market share and volumes of most of its best selling cigarettes such as Dunhill, Kent, Lucky Strike, Hilton, Viceroy and Pall Mall. Dunhill volume increased by 9.7% and Pall Mall boosted by 4.4%, while both Kent and Lucky Strike demonstrated lower results 2.9% and 6.5% respectively.
Entire worldwide cigarette volume sales declined 2.6%, whilst cigarette volumes dropped 2.7%. On the other hand, sales of global brands expanded 2.1% and all round volume growth for the key brands constituted 1.9%.
The company representative declared that they will include the Rothmans brand to the key drive brands portfolio starting 2014. He also stated that the difficulties still remain this year, with the recovery still weak, mainly in its southern European markets. On the other hand, the pricing environment continues to be decent. “BAT persisted to operate ardently in 2013, with one more year of outstanding profits advancement and cash flow, to some extent compensated by currency headwinds. The group’s key cigarette brands also gained exceptional progress in market share and volume. Challenging trading difficulties remain a problem in several places of the world, particularly in southern Europe, however these final results illustrate that the group’s approach proceeds to provide strong revenue and dividend increase,” Chairman Richard Burrows stated in a report.
Taking into account the company’s solid overall performance in latest years, it also has an emphasis on its cash flow. Operating income increased 5% to GBP5.32 billion in 2013. Free earnings went up 3% to GBP3.37 billion.