BAT's earnings fly

July 31, 2001 Posted: 0751 GMT

LONDON (CNN) -- British American Tobacco, the world's second-largest cigarette maker, posted a 39 percent rise in first-half profits as sales jumped.

The maker of  brands such as Benson & Hedges, Peter Stuyvesant and Dunhill said net profits for the six months to June 30 rose to £440 million, or 29.39 pence a share, from £317 million, or 26.30p a share, a year ago.

"Although we have to face the fact that economic conditions are deteriorating around the world, we confidently expect to continue building sustainable shareholder value," said Chairman Martin Broughton.

BAT has offset the negative impact of restrictions on cigarette advertising in the U.S. and western Europe, as well as continuing lawsuits in the U.S., by driving up sales in eastern Europe and in Asian countries such as Malaysia, Taiwan, South Korea and Vietnam.

The company said sales of its key brands rose 9 percent as overall revenues jumped more than 10 percent in the six months to £13.3 billion compared with 11.9 billion a year ago.

Pretax profits rose a better-than-expected 33 percent to £936 million from £706 million, benefiting from a lower level of exceptional charges compared with last year.

Its acquisition of rival Rothmans International in 1999 is achieving annual synergy benefits of £350 million, at a final cost of merging the businesses of £550 million, the company said.

On the issue of lawsuits, BAT said that while its U.S. unit, Brown & Williamson, lost an appeal in the U.S. Supreme Court from a litigant claiming damages for illness caused by smoking "losing an individual case from time to time is simply a cost of doing business in the U.S."

"The number of individual smoking and health cases being filed is not increasing, while class actions continue to be rejected by the courts," BAT said.

Shares in BAT (BATS) , which fell to a low of  235 pence in March 2000, declined 1.6 percent in London on Tuesday to 550.5 pence after the earnings were released.

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