Investment: BAT's forecast remains hazy
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.BAT IS once again a pure tobacco stock after demerging its financial services arm but its latest figures are anything but simple.
Profits rose by a third to pounds 287m in the third quarter but this was mainly due to the absence of extra provisions for US tobacco settlement, which mopped up pounds 88m at the same stage last year. Profits for the first nine months were down 7 per cent at pounds 963m.
Forecasts had ranged all the way from pounds 925m to pounds 989m, reflecting difficulties in assessing the impact of a whole raft of special factors. Financial services and other trading activities still contributed pounds 34m to third- quarter profits and pounds 94m in the nine months figures.
The strong pound reduced operating profits by pounds 16m and demerger costs absorbed pounds 17m in the third quarter. Over the first nine months provisions for compensation claims in the US rose from pounds 108m to pounds 150m, exchange rates cost pounds 41m and demerger costs took a further pounds 43m but profits to date include a pounds 78m tax windfall from Brazil.
Cigarette sales were 3 per cent up in the third quarter, and the decision to resist discounting in the America-Pacific region paid off.
But the immediate prospects for a business whose fastest growing markets are in Asia, Latin America and Russia are inevitably under a cloud. The effects of the recession were felt for the first time in the latest quarter and in the chairman's own words the outlook there is now "extremely challenging".
Analysts who yesterday edged full year forecasts up to around 49p before exceptionals trimmed next year's figures down to the same figure. After falling 28.5p to 478p yesterday, the shares appear seductively cheap at only eight times forward earnings and on a prospective yield of 7.75 per cent. But all the usual reservations must apply.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments