Reynolds a boost to BAT

Group paid $54.5bn for to­tal own­er­ship

The Star Early Edition - - COMPANIES - Sandile Mchunu

BRI­TISH Amer­i­can To­bacco (BAT) ac­qui­si­tion of Reynolds had boosted its next gen­er­a­tion prod­ucts (NGPs) and this boded well for the fu­ture, the to­bacco com­pany said yes­ter­day.

Ear­lier this week BAT an­nounced that it had com­pleted the pur­chase of the 57.8 per­cent of Reynolds it did not al­ready own.

The group said it paid $54.5 bil­lion (R709.27bn) for to­tal own­er­ship and Reynolds’ stock was ex­pected to be delisted from the New York Stock Ex­change and S&P in­dices at the close of trad­ing on Tues­day.

Reynolds is es­ti­mated to have be­tween 2 000 and 2 200 lo­cal em­ploy­ees, the ma­jor­ity of whom work at its plant in Tobac­cov­ille.

BAT chair­per­son Richard Bur­rows said these were ex­cit­ing times for the group. “In the first six months of 2017, the com­bustible busi­ness con­tin­ued to per­form well, against the back­drop of a strong vol­ume com­para­tor. The per­for­mance of Glo con­tin­ues to ex­ceed ex­pec­ta­tions, with new mar­ket launches show­ing en­cour­ag­ing early signs,” Bur­rows said. Glo is a heated to­bacco prod­uct.

BAT now is the largest vapour com­pany in the world and the suc­cess­ful com­ple­tion of the Reynolds ac­qui­si­tion bol­sters its lead­ing po­si­tion in both NGPs and com­bustibles.

“We re­main con­fi­dent of de­liv­er­ing an­other year of good earn­ings growth at con­stant rates of ex­change,” Bur­rows added.

In South Africa, the group said vol­ume and profit fell due to down-trad­ing and the growth in il­licit trade. Ben­son & Hedges and Dun­hill con­tin­ued to grow mar­ket share, al­though this was more than off­set by Pe­ter Stuyvesant, with its to­tal mar­ket share down.

In the East­ern Europe, Mid­dle East and Africa re­gion, profit from op­er­a­tions at the cur­rent rates of ex­change grew by 18.8 per­cent, partly due to the weak­ness of the pound.

In the six months to end June, the group’s rev­enue rose 16 per­cent to £7.72bn (R131.13bn), helped by ster­ling’s weak­ness, while rev­enue at con­stant cur­rency, ad­justed for ex­cise on goods pur­chased from third par­ties, was up 2.5 per­cent.


Profit from op­er­a­tions, at cur­rent rates of ex­change, was 16.3 per­cent higher at £2.57bn. How­ever, group cig­a­rette vol­ume was 314 bil­lion, a de­cline of 5.6 per­cent on the same pe­riod last year.

Chief ex­ec­u­tive Ni­can­dro Du­rante said the per­for­mance of the group dur­ing the pe­riod was in line with ex­pec­ta­tions and demon­strated the good or­ganic progress the group was mak­ing.

“The rel­a­tive weak­ness of ster­ling led to a sig­nif­i­cant tail­wind on our re­ported re­sults, with rev­enue 15.7 per­cent higher and profit from op­er­a­tions up 16.3 per­cent at cur­rent rates of ex­change.

“Ex­clud­ing the trans­la­tional tail­wind and the ad­just­ing items, ad­justed rev­enue and ad­justed profit from op­er­a­tions were both up, 2.5 per­cent and 3.2 per­cent, re­spec­tively, at con­stant rates of ex­change,” said Du­rante.

The board had de­clared an in­terim div­i­dend of 56.5 pence, be­ing one third of the to­tal 2016 div­i­dend, a 10 per­cent in­crease on last year.

The owner of Dun­hill, Lucky Strike and Pall Mall brand cig­a­rettes said last month it ex­pected to in­crease prof­its in the sec­ond half of the year. BAT shares dipped 0.35 per­cent on the JSE yes­ter­day to close at R905.62.


Lucky Strike cig­a­rettes, made by BAT, dis­played in this file photo. But through its ac­qui­si­tion of Reynolds BAT has now be­come the largest vapour com­pany in the world.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.