Changeable economic and regulatory conditions had no visible effect on BAT's results as the maker of Lucky Strike, Kent and Pall Mall cigarettes continues to grab market share in emerging economies. This helped to slow down the decline of cigarette sales volumes, which fell by only 0.4 per cent last year – better than the rest of the industry. A doubling of share buy-backs to £1.25bn looks well supported by annual free cash flow of £3.3bn and underlines how BAT's global presence gives it immense earnings power.
All of BAT's regional divisions contributed to the group's 11 per cent increase in underlying operating profits to £4.72bn, but BAT's dominance in sub-Saharan Africa meant that eastern Europe, Middle East and Africa segment grew particularly strongly. Underlying operating profits there increased by 12 per cent to £1.31bn, a sign of the region's growing economic confidence as smokers traded up to premium brands such as Dunhill. Even economically challenged western Europe grew profits by 11 per cent to £1.22bn, mainly through cost cuts and raising prices in mature markets, such as Germany and Switzerland, since cigarette volumes were flat at 135bn.
Overall, group cost savings are currently ahead of the 50-100 basis points improvement in margin that management had expected to achieve.
Bank of America Merrill Lynch expects 2012 adjusted EPS to rise to 211p (195p in 2011).
BRITISH AMERICAN TOBACCO (BATS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 3,114p | MARKET VALUE: | £61.3bn | |
| TOUCH: | 3,113-3,114p | 12-MONTH HIGH: | 3,174p | LOW: 2,258p |
| DIVIDEND YIELD: | 4.06% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 414p* | NET DEBT: | 94% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 10.0 | 3.08 | 105 | 66.2 |
| 2008 | 12.1 | 3.68 | 123 | 83.7 |
| 2009 | 14.2 | 4.08 | 137 | 99.5 |
| 2010 | 14.9 | 4.39 | 145 | 114.2 |
| 2011 | 15.4 | 4.93 | 156 | 126.5 |
| % change | +3 | +12 | +8 | +11 |
Ex-div: 7 Mar Payment: 3 May *Includes intangible assets of £12bn, or 609p a share | ||||
