The shares of British American Tobacco (LSE: BATS) (NYSE: BTI.US) fell a little under 1% to 3,123p during early trade this morning after reporting cigarette volumes declined by 3% in 2013 to 676 million.
British American Tobacco launched Vype in the UK last year — the company’s first electronic cigarette — to “better reflect” the changing needs of its customers, and more market launches are planned.
The firm, which has a stable of international brands, reported flat revenue at £15.3bn amid adverse currency headwinds. At constant exchange rates, however, revenue improved 4% to £15.8bn on the year before.
In addition there was a 5% rise in operating cash flow to £5.3bn, reflecting a decrease in capital expenditure and gains in operating performance.
Due to the strength of the group’s balance sheet a further £1.5bn will be returned to shareholders via share buybacks in 2014.
The chief executive, Nicandro Durante, commented:
“British American Tobacco had another very good year in 2013, again meeting or exceeding our financial metrics. I am as confident as ever in the growth of our tobacco business. The Group’s strong performance in 2013 was achieved against a backdrop of adverse exchange rate movements, lower industry volume and instability in some parts of the world.”
“Challenges persist in 2014. Economic recovery is still fragile, particularly across southern Europe. However, we have shown a consistent ability to improve our operating margin and grow market share. The pricing environment also remains good. n short, we have the expertise, the talented people and the global reach to succeed.”
The total dividend for 2013 increased 6% to 142p supported by 1.5 times earnings cover equivalent to 217p per share. Earnings increased 6% on 2012.
Of course, the decision to ‘buy’ — based on those ratings, today’s results and the wider prospects for the tobacco industry — remains up to you.
