BAT share price: Group warns on trading environment

British American Tobacco (LON:BATS) has posted its quarterly results this morning, unveiling a rise in revenue. The company, however, warned that the trading environment remained challenging, mostly on account of forex headwinds.

**Highlights from the company statement:**
Cigarette volume from subsidiaries grew by 3.6% to 158 billion with organic volume up 2.4%. Excluding the effect of inventory movements in the comparator period, like for like volume was up by 1.1% demonstrating the strength of the portfolio. Volume increased in a number of markets including Ukraine, Middle East, Bangladesh, Indonesia, Russia, Turkey, Vietnam, Japan, Romania, France, Spain and Mexico. This more than offset lower volume in markets including Pakistan and Malaysia, which were impacted by significant excise led price increases.

GDB volume was up by 10.5%. Dunhill increased by 5.5%, as growth in Indonesia and South Korea more than offset lower volume in Malaysia. Kent was 9.7% higher driven by growth in Chile, Turkey and Japan. Lucky Strike was up by 12.6%, due to higher volume in Colombia, France and Italy. Pall Mall was lower by 5.1% as growth in a number of markets including Venezuela, Poland and Mexico was more than offset by lower volume in Pakistan and following the migration to Rothmans in Italy. Rothmans built on an exceptional 2015 with further volume growth of 49.4% in the quarter, driven by Ukraine, Russia, Italy, Turkey and Algeria.
We continue to grow market share, up by a further 20 bps on a strong performance in 2015, as growth in Ukraine, Indonesia, Turkey, Russia, Bangladesh, Philippines and Japan more than offset lower market share in Brazil, GCC and South Korea.
Revenue was up by 7.5% at constant rates of exchange or 6.1% on an organic basis. Price/mix was nearly 4%, with the impact of exceptional pricing in high inflation markets being offset by increased adverse geographic mix.
At current rates of exchange, revenue was up by 1.7% as movements in the majority of the Group’s key trading currencies relative to the same period last year adversely impacted reported revenue.
Trading environment
The trading environment remains challenging, notably due to the continued impact of adverse exchange rates at a transactional level which is estimated to be a profit headwind of approximately 7%, with a consequent impact on operating margin. If sterling stays at the current rate for the rest of the year, there would be a positive translational effect of approximately 3% on earnings.
As of 07:13 BST, Tuesday, 26 April, British American Tobacco plc share price is 4,162.50p.