BAT Nine-Month Cigarette Shipments Fall on Europe and Brazil

BAT Building

British American Tobacco Plc, the biggest tobacco company in Europe, reported that shipments dropped during the first nine months of the year due to lower cigarette consumption in Brazil and Western Europe.

The amount of cigarettes marketed decreased to 517 billion from 523 billion in 2011.

Shipments in Western Europe dropped 5%, whilst volume declined in Brazil after a price rise in May. BAT, which produces well-known Lucky Strike and Pall Mall cigarettes, has increased prices to balance out dropping tobacco consumption and raised government limitations on smoking. The tobacco market remains tough and growth of illicit trade is steal a threat, the company said.

Conditions in Brazil are showing signs of damage after the 21% price increase, analyst David Hayes said. Brazil makes up about 10% of the company’s volume, he said.

The cigarette maker’s shares dropped 0.8% to 3,138.5 pence. The stock has advanced 2.6% this year, getting its market value to 60.7 billion pounds ($97 billion).

BAT as well experienced volume declines in Japan, Italy, Turkey and Egypt. The group’s four key cigarette brands, including Dunhill and Kent, showed a volume gain of 3%, a drop from the 8% advance in the same period in 2011.

Philip Morris International, the biggest cigarette maker in the world, last week announced third- quarter income after sales tumbled 15% in Europe, where smokers have switched to contraband cigarettes or roll-your-own varieties.

Hayes said the company is in a “better place” in Europe as 22% of its revenue derives from that region, a lower share than both PMI and Imperial Tobacco Group, the U.K.’s largest cigarette company.

Tobacco companies including London-based BAT and New York-based PMI are also suffering from a smoking crackdown in Russia, the largest cigarette market after China, whose government is demanding an eightfold boost in cigarette taxes in addition to a bill that prohibits smoking in public places and cigarette sales in kiosks. BAT has around 21% of the Russian tobacco market, behind Japan Tobacco and PMI.

British American Tobacco said that nine-month company income increased 4% at constant exchange rates.

The group said it has acquired back 30 million shares so far this year for 978 million pounds ($1.6 billion).

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