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News Release

Interim Management Statement for the nine months ended 30 September 2009

• Strong revenue growth at both constant and current exchange rates
    
• Volumes from subsidiaries increased 2 per cent to 533 billion
    
• Global Drive Brands volumes grew by 4 per cent

Trading update

British American Tobacco performed well in the nine months to the end of September, although total volume growth slowed.
  
Group revenue for the nine months grew strongly in constant currency terms, driven by the continued good pricing momentum and volume growth from the acquisitions made in the middle of last year (Skandinavisk Tobakskompagni (ST) in Denmark and Tekel in Turkey), as well as the acquisition of PT Bentoel Internasional Investama Tbk (Bentoel) in Indonesia on 17 June 2009. All regions contributed to this good result. Revenue benefited further from the favourable impact of significant exchange rate movements.
  
Group volumes from subsidiaries were 533 billion, up 2 per cent, as a result of the acquisitions of ST, Tekel and Bentoel. Organic volumes were 3 per cent lower than last year as a result of a sharp decline in the low margin volumes acquired in the ST and Tekel transactions, which were included, on a comparable basis, for the first time in the third quarter.
  
The four Global Drive Brands had a good performance and achieved overall volume growth of 4 per cent. Dunhill was up 6 per cent, Lucky Strike 5 per cent and Pall Mall grew by 9 per cent; Kent volumes were 2 per cent lower mainly driven by industry volume declines in its key markets.

Cigarette volumes

The segmental analysis of the volumes of subsidiaries is as follows:

Trading environment

This strong performance was achieved against deteriorating trading conditions, with industry volumes lower in a number of markets including Japan, Russia, Brazil, Italy and South Africa, as well as a decline in the premium segment in the third quarter. In some markets, particularly in Central and Eastern Europe, there was down-trading to illicit trade as a result of excise increases, affecting the low price segment.

The Group continued to address its cost base and, amongst other initiatives, started the consultation process with a view to closing the Soeborg factory in Denmark.

Summary

Paul Adams, Chief Executive, commented “Our consumers are clearly finding the current 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 in revenue.”

- Interim Management Statement for the nine months ended 30 September 2009 - full announcement (160 kb)