Profit of British American Tobacco has increased due to price increase on cigarettes

August 15, 2011

British American Tobacco (BAT) has significantly increased prices on cigarettes during first six months owing to which it was able to raise profit in spite of sales volume decay.

BAT's diluted profit during first six months has made 96.1 pens on a share against 95.1 pens expected.

Adjusted operating profit of the Company has grown by 12 % up to 2.7 billions pounds. Total gain has increased by 2 % up to 7.4 billion pounds. BAT that produces cigarettes under brands Kent, Dunhill, Lucky Strike and Pall Mall has informed that price increase almost by 8 % helped to compensate sales volume lowering by 1 %, owing to which base gain of the Company has increased by 7 %.

BAT, the second largest tobacco products manufacturer in the world has also stated that its opportunity to increase prices even in terms of slowly growing markets gives the Company reasons to wait for growth in 2011 on the back of quit from recession of many countries economics.

BAT has forecasted fall of cigarettes sale due to the growth of demand on cheaper and sometimes counterfeit cigarettes and also increase of excise taxes and high level of unemployment.

Company was able to protect itself from decay thanks to wide geographical distribution of its business considering growth of commodity prices on five key markets - Brazil, Russia, Canada, Australia and South Africa.