LONDON (AFP) – British American Tobacco, fresh from its takeover of US peer Reynolds, reported on Thursday sliding first-half net profits, but sales jumped on the back of the Brexit-hit pound.
Profit after tax slid 15 percent to £2.3 billion ($3.0 billion, 2.6 billion euros) in the six months to June 30 from a year earlier, the maker of Lucky Strike cigarettes said in a results statement.
BAT, whose cigarette brands include also Dunhill and Kent, added that sales leapt 15.7 percent to £7.71 billion in the reporting period.
Sterling has slumped in value since the June 2016 referendum in favour of Britain leaving the European Union. That has made BAT’s products more attractive for US buyers.
“The performance of the group in the first six months of the year is in line with expectations and demonstrates the good organic progress we are making,” BAT chief executive Nicandro Durante said in the earnings statement.
“The relative weakness of sterling led to a significant tailwind on our reported results, with revenue 15.7-percent higher.”
BAT paid almost $50 billion (47 billion euros) for control of Reynolds American in a move that targets the lucrative United States market and the fast-growing e-cigarette sector.
“As a result of the deal, the enlarged group has a balanced presence in high growth emerging markets and high profitability developed markets, combined with direct access to the attractive US market,” noted Durante on Thursday.
The transaction, which completed earlier this week, added cigarette brands including Camel and Newport to BAT’s portfolio.