BAT, maker of Lucky Strike, Dunhill and Kent cigarettes, is going through a management shake up with the anticipated retirement of chief executive Paul Adams in February next year. The background of his successor, BAT's chief operating office Nicandro Durante, gives investors a clue as to where growth is likely to come from over the next few years.
The group's global spread and reliance on emerging markets is evident from the distribution of the half-year's underlying profit. Out of operating profits of £2.46bn, Asia-Pacific contributed £651m, the America's £694m and Africa-Middle East £443m. The full integration of the Indonesian Bentoel acquisition, a boost from currency gains and a strong all round performance added £94m to Asia-Pacific's profits, while BAT still managed to increase market share in countries such as Japan where smoking is in long-term decline.
Trading in Africa was equally impressive (£76m uplift in underlying profit) driven by a strong performance in Nigeria and Egypt where consumers traded up to premium brands such as Rothman's. However, the adverse impact of exchange rates and operational problems in Eastern Europe, principally an increase in smuggling in Romania, cut profits in that region by £59m to £124m.
Charles Stanley forecast full-year adjusted pre-tax profits of £5.01bn and EPS of 175p (2009: £4.4bn/153p).
BRITISH AMERICAN TOBACCO (BATS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,247p | MARKET VALUE: | £44.9bn | |
| TOUCH: | 2,245-2,248p | 12-MONTH HIGH: | 2,336p | LOW: 1,807p |
| DIVIDEND YIELD: | 4.7% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 436p* | NET DEBT: | 103% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 6.78 | 2.12 | 73.2 | 27.9 |
| 2010 | 7.29 | 2.28 | 76.9 | 33.2 |
| % change | +8 | +8 | +5 | +19 |
Ex-div:18 Aug Payment:29 Sep *Includes intangible assets of £12.2bn, or 612p a share | ||||
