British American Tobacco 1H profit rises 15 pct

British American Tobacco PLC on Thursday said first-half profit rose by 15 percent on higher prices, increased sales of premium brands and a 134 million pound (US$265 million) benefit from foreign exchange.

The world's no. 2 tobacco company made net profit of 1.34 billion pounds (US$2.66 billion) compared with 1.17 billion pounds (US$2.31 billion) in the first half of 2007, the company said in a statement.

In the second-quarter, profit increased 11 percent from 630 million pounds (US$1.248 billion) to 697 million pounds (US$1.380 billion). Sales rose 17 percent from 2.493 billion pounds (US$4.937 billion) to 2.916 billion pounds (US$5.775 billion) in the three months ending June 30.

First half sales climbed 15 percent to 5.46 billion pounds (US$10.8 billion).

The company's comments focused mainly on the six-month results. Chairman Jan du Plessis said in a statement the improvement was driven in part by a 134 million pound (US$265 million) benefit from changes in foreign exchange rates and charging more for the company's products. Sales of the company's premium brands — their most expensive, which include Dunhill, Kent and Lucky Strike — grew by 7 percent, he said.

Sales volume for the global brands, comprising those three and Pall Mall, grew by 20 percent, around a third of which came from brand migrations, such as the migration of Benson & Hedges to Kent in South Africa.

BAT also said it had completed two acquisitions announced in February. It bought the cigarette assets of Tekel, the Turkish state-owned tobacco business, for 866 million pounds (US$1.715 billion) on June 24. And it also acquired on July 2 the privately held Danish Skandinavisk Tobakskompagni in exchange for its 32.35 percent stake in ST and 1.15 billion pounds ($2.3 billion) in cash. Neither of these acquisitions had any impact on first-half profit, the company said.

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"While not immune from the consequences of an economic slowdown, we can certainly look to the future with more confidence than most," said du Plessis.

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BAT shares rose 0.80 percent to 1,881 pence (US$37.25) in London trading.

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On the Net: http://www.bat.co.uk/