BAT Upbeat on Tobacco (fwd)

[Robert Weissman <rob@essential.org>]

INTERVIEW-B.A.T. upbeat on tobacco business

ZURICH, May 18 (Reuters) - B.A.T. Industries Plc (quote from Yahoo! UK &
Ireland: BATS.L) Chairman Lord Cairns said the
group's tobacco business should thrive when it is split off from B.A.T.'s
financial services arm and pay out 50 percent of
sustainable profits to shareholders each year.

Asked by Reuters Television if the stand-alone tobacco business had enough
growth potential to justify B.A.T.'s financial
commitment and ongoing investment, Cairns said: ``Absolutely, we are very
confident there....

``I have no doubt that that business will be able to run on its own well.
Indeed, to the extent that it is a highly cash generative
business whereas the financial service side needs considerable capital to
develop its business on a prudent basis, one of the
real advanatges of the split that we see is that each will be able to have a
financial structure which is specifically appropriate
for the type of business which it is,'' he added.

The large cash flow will finance larger payouts than the financial services
business, which B.A.T. is merging with the Zurich
Group (ZURZn.S).

``The tobacco business has indicated that it will be returning 50 percent of
sustainable profits to shareholders each year, so I
think it will be a relatively high income earner, whereas the new financial
service group, Zurich Financial Services, will be
distributing only 30 percent of its overall income because of the need to
retain capital in the business.'' 


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