British American Tobacco Set for "Good Earnings Growth"

LONDON -- The shares of British American Tobacco (LSE: BATS.L  ) (NYSE: BTI  ) slipped 13 pence to 3,150 pence in early London trade this morning, despite chief executive Nicandro Durante's claiming that the group is "on track for another year of good earnings growth."

His comments were made alongside a third-quarter trading statement, in which the FTSE 100 member revealed that underlying sales had improved 4% during the first nine months of the year. Durante added: "Economic recovery remains fragile this year and difficult trading conditions persist in many parts of the world. However, pricing remains strong, we are growing underlying market share and our Global Drive Brands continue to perform well."

BAT acknowledged that cigarette volumes had slid 1% to 512 billion during the nine months to the end of September, with higher sales in Bangladesh, Vietnam, Pakistan, and Saudi Arabia offset by decreases in Brazil, Japan, Italy, Turkey, and Egypt. This morning's statement also referred to industry sales remaining under pressure and illicit trade becoming a greater threat due to excise increases and lower consumer spending.

However, the firm noted that its four major brands continued to do well. Volumes of Kent were "slightly up," volumes of Dunhill and Pall Mall advanced 2%, and volumes of Lucky Strike jumped 14%. Volumes of fine-cut tobacco improved 8%.

Prior to today, City brokers expected BAT's earnings to improve from 195 pence to 208 pence per share during 2012, which in turn could help the dividend advance from 127 pence to 136 pence per share. Those forecasts equate to a near-term P/E of 15 and a forthcoming yield of 4.3%.

Finally, BAT remains an important part of the dividend portfolios controlled by equity income superstar Neil Woodford. This exclusive report -- "8 Popular Dividend Shares Held By Britain's Super Investor" -- reveals why the ace City stock-picker continues to hold tobacco shares. The report, which also showcases Woodford's other major holdings, is free to download today and comes with no further obligation.

Are you looking to profit as a long-term investor? "10 Steps To Making A Million In The Market" is the latest Motley Fool guide to help Britain invest. Better. We urge you to read the report today -- while it's still free and available.

Further Motley Fool investment opportunities:

Maynard does not own any share mentioned in this article. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2073004, ~/Articles/ArticleHandler.aspx, 11/22/2014 7:22:28 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement