British American Tobacco PLC (BTI) Thursday reported sharply stronger first-half operating profit and sales as the tobacco giant was helped by currency tailwinds.
Earlier this week, BAT closed a deal to acquire the remainder of Reynolds American Inc. it didn't already own, making it the world's largest listed tobacco company.
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The owner of Dunhill, Lucky Strike and Pall Mall brand cigarettes said net profit during the six months ended June 30 fell 15% to 2.26 billion pounds ($2.97 billion) as the company felt the impact of last year's sale by Reynolds of the international rights to the Natural American Spirits brand. The U.S. company--which BAT had owned 42% of for years before acquiring it outright--sold the rights to Japan Tobacco Group in January 2016 for $5 billion.
BAT's adjusted operating profit--which strips out restructuring and integration costs and the impairment of trademarks--rose 16%.
Following Britain's vote to leave the European Union and sterling's consequent slide, BAT has benefited from a so-called "translational" impact, in other words money earned abroad translates into more pounds back home.
Revenue at BAT rose 16% to GBP7.72 billion, helped by sterling's weakness, while revenue at constant currency, adjusted for excise on goods purchased from third parties, was up 2.5%.
Group cigarette volume was 314 billion, a decline of 5.6% on the same period last year.
Last month BAT said it expected to profit growth to be weighted to the second half of the year because of the timing of shipments and the way it has allocated marketing spend, investments in next generation products. Thursday, Chairman Richard Burrows said the company is confident of delivering another year of good earnings growth at constant currency rates.
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(END) Dow Jones Newswires
July 27, 2017 03:02 ET (07:02 GMT)