Market Report: British American Tobacco lights up after sales outstrip City hopes

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No smoke and mirrors from British American Tobacco — just a solid trading statement that helped its shares puff higher.

The world’s number-two cigarettes maker rose 68p, or 1.8%, to 3861.5p, taking its leap this year to 10% in the face of tough market conditions.

The company behind the Dunhill and Lucky Strike brands revealed underlying sales growth of 4.2% so far this year, well ahead of analyst forecasts of between 2.6% and 3.6%.

However, when currency movements are taken into account, revenues fell 6.5%. 

Investors feared the results would be worse as tobacco groups grapple with a number of factors contributing to falling sales, including tighter regulation and higher taxes.

Last month, BAT made its move into the fast-growing e-cigarettes market by snapping up Poland’s CHIC, one way it hopes to buck the overall decline.

It also shrugged off a ruling from a Canadian appeal court yesterday which told its subsidiary Imperial Tobacco Canada to set aside £374 million as it challenges billions of dollars of damages awarded to smokers in Quebec. 

Its strong showing boosted shares in rival Imperial Tobacco by 44p to 3498p.

It was back to winning ways for the FTSE 100, which picked up 22.34 points to 6387.61 ahead of the interest rate decision from US Federal Reserve policymakers.

Mic Mills at Capital Index reckons a hike this month is “unthinkable” after the deluge of bad data from across the pond in recent weeks.

Chilean copper miner Antofagasta lost its shine, down 16p at 528.5p, as it slashed its production forecast for the third time this year.

Investors in Bwin.Party were in the money after the online gambling group’s shares rose 2.07p to 108.27p as sports betting turnover hit the same level as last year even without the tonic of last year’s World Cup.

Petra Diamonds dropped 7.45p to 73p to its lowest mark in five years as it overtook Premier Oil as the FTSE 250’s biggest faller of 2015. First-quarter production beat brokers’ expectations but diamond prices lost their sparkle, down 8.8% compared with last year’s period.


Fading: Diamond prices (Picture: Reuters)

Data centres group Telecity, which is waiting on the regulatory green light for its £2.4 billion takeover by Equinix, edged up 9p to 1188p as it confirmed it is on track to hit annual guidance.

Investors tuned into online musical instruments retailer Gear4music, up 2.68p at 145.18p, on the back of its first results since floating on AIM in June.

Half-year revenues soared 43% to £12.5 million, while its pre-tax loss widened to £1 million as it counted the cost of its listing.

Chief executive Andrew Wass said: “The group continues to trade with good momentum and in line with the board’s expectations and is well placed heading into the key Christmas trading period.”

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October 28, 2015 |
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