British American Tobacco (BAT), the world’s second largest cigarette company, beat expectations and reported strong results for its second quarter, helped by cost savings and market share gains. Company shares for the maker of Dunhill and Lucky Strike were up 2.8%.
All large tobacco companies are grappling with falling sales in many markets due to increasing regulation, higher taxes, economic weakness and growing health consciousness. While cigarettes remain a highly profitable business, most of the large players now also sell e-cigarettes, which heat nicotine-laced liquid into an inhalable vapor.
Excluding the impact of currency moves, such as a weaker Russian rouble and Brazilian real and stronger British pound, revenue rose 2.4%, compared with a rise of 1.7% in Q1. Volume, however, fell 2.9%.
“The underlying performance of the business remains strong and we are confident that we are on course to deliver an improved second half,” said BAT chairman Richard Burrows.