British American Tobacco, the world's second-biggest cigarette maker, reported a 25 per cent fall in half-year profits today, but said it remained on track in a challenging year.
The group which bought Italy's state-owned tobacco company ETI earlier this month, and makes brands such as Lucky Strike, Kent, Dunhill and Pall Mall, reported first-half 2003 pre-tax profits of $1.24 billion, largely in line with analysts forecasts.
Group operating profits rose two per cent as its global cigarette volumes rose one percent in the half-year, but the pre-tax line fell due largely the cost of restructuring its businesses in the UK and Canada.
"In a challenging year, we remain very much on track and are underlying our confidence in the future by a 10 per cent increase in the interim dividend," said group Chairman Mr Martin Broughton in a results statement.
The group proposed a 10 per cent rise in the half-year dividend to 11.8 pence a share, while half-year adjusted earnings per share rose four percent to 31.74p a share.
BAT shares have performed in line with the FTSE 100 index over the last year, but are valued at a 40 per cent discount based on 2004 prospective earnings to UK rivals Gallaher and Imperial Tobacco, largely due to worries over BAT's US exposure.