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Tax, Currency Forecast Smokers are ``probably prepared to pay substantially more,'' said Thomas Russo, who holds BAT shares among the more than $3 billion he helps manage at Gardner Russo & Gardner in Lancaster, Pennsylvania. He spoke before the results. Shares of BAT slipped 8 pence, or 0.5 percent, to 1,635 at 11:11 a.m. in London after rising 1.4 percent yesterday. BAT, whose brands also include Kent, today said second-half operating profit excluding currency fluctuations will trail the first half's 18 percent pace because of tax increases in Malaysia, South Africa and Brazil. The company also expects a ``significant'' increase in second-half marketing spending. Currencies will cut about 35 million pounds from second- half profit given their current levels, spokesman Michael Prideaux said. Foreign-exchange effects reduced first-half profit by 115 million pounds. Chief Financial Officer Paul Rayner previously said currencies would probably reduce annual operating profit by 4 to 5 percent. Smoking Bans The number of cigarettes BAT sells this year will probably match last year's level, CEO Adams said on a conference call. Rayner said BAT's second-half operating profit margin will be lower than in the first half, when it was 32.2 percent. Consumption in western Europe has been falling about 1 percent to 2 percent a year as taxes, prohibitions on advertising and smoking bans gather pace. That has spurred BAT and rivals to expand in emerging markets. England and France started restrictions on smoking in public places this year. Most European Union countries enacted bans on tobacco advertising by 2005. The stock has have advanced about 13 percent in the past year, matching gains by Altria. Of 17 recommendations compiled by Bloomberg, 14 analysts rate BAT ``buy'' and three have it at ``hold.'' None rate the stock ``sell.'' BAT raised Adams's pay 21 percent to 2.57 million pounds last year as profit beat the company's target for a third consecutive year since he started the job. Reynolds Buyback? The company has a goal of increasing earnings per share excluding one-time items by almost 10 percent on average over coming years. BAT also aims for about 6 percent average operating growth per year and 3 percent to 3.5 percent average growth in sales excluding currency fluctuations. British American Tobacco owns a 42 percent stake in Reynolds American Inc., which sells Camel cigarettes in the U.S. Reynolds yesterday said second-quarter profit fell 14 percent as earnings were boosted in the year-earlier period by a factory closing and hoarding before price increases. BAT Chairman Jan du Plessis said the company ``certainly supports the principle'' of Reynolds considering a share buyback. Dianne Neal, the U.S. company's chief financial officer, yesterday said Reynolds would only make such a move if BAT would participate. Du Plessis declined to comment on whether BAT would do so. BAT said it will pay an interim dividend of 18.6 pence a share, 18 percent more than last year. © Copyright 2006 by CigarettesOn.Com |
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