GLOBAL cigarette company British American Tobacco (BAT) yesterday said that although volume growth slowed as a result of the economic downturn, it performed well in the nine months to September .
It said group revenue for the nine months grew strongly in constant currency terms, driven by the continued good pricing momentum and volume growth from acquisitions made in the middle of last year.
The group said this strong performance was achieved against deteriorating trading conditions, with industry volumes lower in a number of markets, including Japan, Russia, Brazil, Italy and SA.
It said in some markets, particularly in central and Eastern Europe, there was a down-trading to illicit trade as a result of excise increases affecting low price segments.
“Revenue benefited further from the favourable impact of significant exchange rate movement,” the group said.
CEO Paul Adams said, “Our consumers are clearly finding the economic conditions difficult, as unemployment continues to rise. This has led to a softening of our volumes, although I am encouraged by the growth in our global drive brands and the strong growth revenue.”
BAT said group volumes from subsidiaries increased 2% to 533-billion cigarettes, as a result of the acquisition of Skandinavisk Tobakskompagni in Denmark, Tekel in Turkey and Bentoel.
BAT has a presence in more than 180 markets. Its portfolio, which has more than 300 brands, includes four global drive brands, Dunhill, Kent, Lucky Strike and Pall Mall.
Organic volumes were 3% lower than last year as a result of a sharp decline in the low margin volumes acquired in the Danish and Tekel transactions, which were included, on a comparable basis, for the first time in the third quarter.
The four global drive brands together achieved a volume growth of 4% in the period under review. Dunhill increased 6%, Lucky Strike 5% and Pall Mall grew 9%.
But Kent volumes decreased 2% mainly due to industry volume declines in its key markets.In the Asia-Pacific volumes remained steady at 134-billion from last year, America declined from 119- billion to 111-billion; Western Europe grew from 89-billion to 98-billion; Eastern Europe declined to 95-billion from 102-billion and Africa and the Middle East increased from 80- billion to 95-billion.
The group said it continued to address its cost base and, among other initiatives, had started the consultation process with a view to closing the Soeberg factory in Denmark to ensure continued growth.
Since going on its cost-saving drive it has saved almost a third of its five-year target last year.
It managed to cut back £245m on top of the £1bn it took out of running costs in the five years to 2007. Main areas of focus were the supply chain, overheads and indirect costs.BAT said the group had sufficient financing and facilities for the foreseeable future and at 30 September its guaranteed revolving credit facility of £1,75bn was undrawn.
The facility would act as a backstop for the group’s re-established euro commercial paper (ECP) programme of which £663m was outstanding on 30 September .

BUFFALO (wned) - With a growing deficit to close, Albany is once again considering collecting taxes from Indian smoke shops.
During a leaders meeting today, Assembly Speaker Sheldon Silver says he is skeptical about the state generating much revenue. But Silver says in this recession the issue needs to be explored.
Governor David Paterson says he also thinks projections are bloated. Paterson says he’s asking U.S. Attornies across the state for their help if he decides to move forward.
“The issue of collecting taxes from the Indian nations is a law enforcement issue and very much a federal issue and that’s why we are approaching federal law enforcement…to try to bring an end to this 30 year issue,” Paterson said.
Assembly Minority Leader Brian Kolb urged Paterson to ask Congress for help. Kolb, a Republican from Canandaigua, said the tax issue is a 200-year-old problem and Washington has the most leverage with Native American tribes.

NEW YORK - Gov. David Paterson is concerned that members of the state’s Indian tribes may engage in ”violence and civil unrest” if he attempts to tax cigarettes sold at reservation smoke shops.
In a letter dated Sept. 23, Paterson asked three of the state’s top federal prosecutors to help him assess the possibility of violent demonstrations if the state begins collecting its $2.75 per-pack tax on cigarettes sold at tribal shops.
Paterson also asked the Justice Department for an ”operational commitment to help mitigate any disturbances that might occur.”
The letter was sent in confidence, but a copy was obtained Tuesday by The Associated Press.
A law taxing cigarettes sold to non-Indians on the reservations has been in place for years, but previous New York governors have chosen not to enforce it, partly out of fear of stirring up trouble.
The last two attempts to collect such taxes, in 1997 and 1992, led to clashes between tribal protesters and police.
During the 1997 clash, demonstrators halted traffic on the New York State Thruway, set fires and brawled with State Troopers. The state retaliated by blockading the reservations. Then-Gov. George Pataki ultimately backed down.
Since then, the reservation shops have become among the biggest cigarette dealers in the state, selling more than 300 million packs annually. Some reservations are now also home to cigarette factories churning out native brands sold throughout the U.S.
But with the state desperate for new revenue, Paterson is signaling he is giving the issue new thought.
In his Sept. 23 letter, the governor told the U.S. Attorneys for Western New York, Northern New York and Long Island that while his intent was to continue negotiating with the tribes, he wished to assess the possibility ”of a repeat of the violent demonstrations that occurred in 1997” if the state were to act without an agreement.
”I would be grateful if you would please review this matter and provide me with your assessment as to the likelihood of violence and civil unrest,” he wrote.
Richard Nephew, chairman of the governing council at the Seneca Nation, the state’s biggest seller of reservation cigarettes, dismissed the letter with a statement suggesting that the governor was right to be concerned.
”We see the letter as nothing more than the Governor doing his job to assess the historic consequences of what happens when the state tries to violate our treaty rights,” he said.
Spokespeople for the Shinnecock Nation and the St. Regis Mohawk Tribe had no immediate comment. The chief of the Unkechaug Nation did not immediately return an e-mail message. Each of those tribes oversee reservations where untaxed cigarettes are big business.
Paterson spokesman Morgan Hook declined to talk about the matter Tuesday, saying the letter spoke for itself.
The legality of cigarette sales on the reservations has come into question this year as a pair of federal judges in New York have separately ruled it illegal for the smoke shops to sell untaxed products to people who aren’t members of the tribe.
Several smoke shops on the Unkechaug-controlled Poospatuck Reservation have shut down rather than comply with a judge’s order, but there has been no violence or public demonstrations.

Deputies are looking for the man who they think robbed three convenience stores.
The first happened on Sept. 29 at the Circle K on Galloway Road in Lakeland. The second occurred on Oct. 4 at the Circle K on Pipkin Road.
Authorities think the same man robbed a Circle K on Airport Road in Lakeland also on Oct. 4.
In each case, the robber took off with cartons of cigarettes.
Anyone with information is asked to call the Polk County Sheriff’s Office.