British American Tobacco Plc, the maker of Lucky Strike and Pall Mall cigarettes, reported first-quarter sales growth that missed estimates as tobacco consumption declined more than expected.
Revenue at constant exchange rates rose 1.7 percent in the three months through March 31, the London-based maker of Lucky Strike and Pall Mall cigarettes said in a statement Wednesday. That compares with the 3.5 percent median growth estimate of 11 analysts surveyed by Bloomberg.
BAT has relied on price increases as the volume of smokes sold has declined in developed markets thanks to increased government restrictions and the rise of e-cigarettes. In March, the company bid $3.5 billion for the stake it doesn’t already own in Souza Cruz SA, Brazil’s biggest cigarette maker, in an effort to squeeze more profit out of its largest market.
Cigarette volume from subsidiaries declined 3.6 percent in the first quarter, BAT said, worse than the 1.9 percent drop estimated by analysts.
BAT said it is awaiting a decision “shortly” from the Federal Trade Commission over Reynolds American Inc.’s proposed purchase of American tobacco maker Lorillard Inc. The British company is funding $4.7 billion of the $25 billion deal, in order to keep a 42 percent stake in Reynolds.
Bloomberg News, edited by ESM
