British American Tobacco (BAT) has reported strong 2017 full-year results, with revenue and operating profit, adjusted for the impact of its RAI acquisition and currency exchange, up 2.9 per cent and 3.7 per cent respectively, the company said.

BAT’s full-year results, which include its July 2017 acquisition of Reynolds American Inc. (RAI), saw the company post “record” increases of 37.6 per cent in revenue and a 39.1 per cent in operating profit. BAT listed the impact of the RAI acquisition, and the group’s subsequent US cigarette sales, as adding 36 billion sticks and GBP 1.9 billion (EUR 2.1 billion) in operating profit, at constant currency rates, to its 2017 results.
Adjusted to exclude the impact of the merger and currency exchange, BAT’s revenue and operating profits for 2017 were up 2.9 per cent and 3.7 per cent respectively, at constant currency rates. The company said the 3.7 per cent increase in operating profit amounted to GBP 5.6 billion.
The Group shipped 686 billion cigarette and heated tobacco product (THP) units, with the inclusion of RAI volume, at 36 billion units, resulting in an increase of 3.2 per cent compared to 2016 volume. Volumes were down in three of the company’s other four operating regions. 193 billion cigarettes were shipped in the Asia-Pacific region, a decrease of 1.3 per cent. 107 billion units were shipped in the Americas, down 5 per cent. The company shipped 228 billion units in the EEMEA region, a decrease of 3.4 per cent, while volume was up 1.7 per cent in Western Europe, at 122 billion units.
BAT said Western Europe volumes were boosted by Bulgartabac sales in Bulgaria, Fabrika Duhana Sarajevo sales in Bosnia, and higher volumes in Spain, Portugal, Poland and Hungary, which offset declines in Italy and Greece.
In the EEMEA region, higher volumes in Nigeria, Turkey, and Algeria were “more than offset” by declining volumes seen in Ukraine, South Africa, Russia and Iran.
In the Americas, BAT said economic conditions in Brazil and Argentina, and illicit volumes in Chile, offset growth in Mexico.
In the Asia-Pacific, where the glo THP is sold nationally in Japan and South Korea, BAT said volume growth for glo, and higher volumes in Bangladesh, were offset by declining volumes in Japan, Malaysia, Pakistan and South Korea. BAT reported a 3.6 per cent market share for glo in Japan.
In the US, BAT said RAI had a 34.7 per cent market share since the acquisition, up 20 bps on 2016, with moist snuff volumes posted at 3.2 billion units with 34.4 per cent market share.
BAT said sales of its next-generation tobacco products contributed GBP 397 million in revenue in 2017. THP sales were listed as GBP 223 million and vapour sales GBP 173 million. BAT said a 12-month reporting basis for its NGP portfolio, including a full year’s revenue from RAI, would have seen NGP revenue of approximately GBP 500 million.
Volumes of the company’s Global Drive Brands grew 7.6 per cent on an organic basis. Dunhill volume was down 5.9 per cent, Kent volume up 11.2 per cent, Lucky Strike volume up 12.2 per cent, Pall Mall volume up 14.8 per cent, and Rothmans volume up 14.3 per cent, BAT said.
CEO Nicandro Durante commended “The Group delivered another set of strong financial results in 2017, despite a challenging trading environment. Following the transformational deal in July 2017, these results benefit from the acquisition of RAI while also demonstrating the strength of the organic business.
“The Group’s results in 2017 are testament to our commitment to delivering strong results for shareholders whilst at the same time investing substantially in the long-term future of the business. Following our acquisition of RAI, and the progress we are making with NGPs, we can now accelerate our ambition to transform tobacco,” Durante was quoted as saying.