26 April - Interim management statement for the three months ended 31 March 2012

•  Good revenue growth of 6 per cent at constant rates of exchange
•  Revenue growth of 4 per cent at current rates of exchange
•  Volumes from subsidiaries increased by 1.3 per cent to 166 billion, organic volumes increased by 0.7 per cent
•  Global Drive Brand volumes grew by 6 per cent

Nicandro Durante, Chief Executive, commented “We have grown volumes and Global Drive Brands and have achieved good growth in revenue, with continued pricing momentum, although currency headwinds have adversely affected results. It is a strong start to another year of anticipated good earnings growth.”

Summary of performance

Trading update

British American Tobacco performed well in the three months to the end of March 2012 with increased total volumes, as well as continued growth in revenue and Global Drive Brands. Group volumes were higher than last year despite industry volume decline. There are encouraging signs that the overall industry volume decline is moderating.

Group revenue for the three months, on an organic basis and at constant rates of exchange, grew by 6 per cent, driven by volume growth, improving mix and continued good pricing. At current exchange rates, organic revenue grew by 4%, as movements in some of the Group’s trading currencies adversely impacted revenues.

Group volumes from subsidiaries were 166 billion, up 1.3 per cent including the acquisition of Protabaco in October 2011. Organic volumes increased by 0.7 per cent principally driven by growth in Brazil, GCC, Denmark, Bangladesh and Vietnam, partially offset by lower volumes in Italy and South Korea.

Innovations continued to drive the four Global Drive Brands’ performance which led to a volume growth of 6 per cent. Kent was up 7 per cent, driven by Russia, Japan, Middle East, Ukraine and Azerbaijan. Dunhill was in line with last year, mainly as growth in Brazil, GCC, Malaysia, South Africa and Romania was offset by a decline in South Korea. Lucky Strike was up 26 per cent following strong growth in Germany, Spain, Poland, France and Chile. Pall Mall was up 4 per cent largely as a result of growth in Germany, Pakistan, Russia and Uzbekistan, partially offset by declines in Chile, Italy and Spain.

Trading environment

Although there are indications that industry volume decline is moderating, the unsettled economic climate and currency headwinds continue to present a challenging trading environment.

Cigarette volumes

The segmental analysis of the volumes of subsidiaries was as follows:

Share buy-back programme

The Group resumed an on-market share buy-back programme from the end of February 2012. During the three months to 31 March 2012, 5 million shares were bought at a total cost of £150 million excluding transaction costs.

Financial position

The Group has sufficient financing and facilities available for the foreseeable future.

There have been no material events, transactions or change in the financial position of the Group since the year end, other than as outlined in this statement. Further, the Board is not aware of any material events, transactions or change in the financial position of the Group which have occurred up to and including 25 April 2012, being the latest practicable date before the date of the publication of this Interim Management Statement.

Changes to Board Committees

In our Preliminary Announcement, we announced the resignation of Christine Morin-Postel as a member of the Audit Committee with effect from 21 February 2012 due to a personal conflict of interest. Since then, we have taken the opportunity to review the membership of all of our principal Board Committees, which subject to re-election of all Directors at the AGM, will all take effect immediately following the AGM on 26 April 2012:

Audit Committee: Ann Godbehere and Kieran Poynter have been appointed; and Sir Nicholas Scheele has resigned. CSR Committee: Christine Morin-Postel and Sir Nicholas Scheele have been appointed; and Ann Godbehere, Gerry Murphy and Kieran Poynter have resigned. Remuneration Committee: Gerry Murphy has been appointed to succeed Anthony Ruys as Chairman; no changes in membership. Nominations Committee: no changes in membership.

On behalf of the Board
Nicola Snook
Secretary
25 April 2012

Interim Management Statement for the 3 months ended 31 March 2012 (31 kb)