[Intl-tobacco] BAT 1999 results (fwd)

[Robert Weissman]

British American Tobacco Preliminary Announcement -- Year Ended 31 December
1999

 LONDON, March 7 /PRNewswire/ -- The following was issued today by British
American Tobacco:

 SUMMARY

 1999 1998 Change

 Operating profit
 pre-exceptionals 2,022m pounds 1,550m pounds +30%
 Pre-tax profit 1,371m pounds 738m pounds +86%
 Adjusted earnings per share 52.33p 46.12p +13%
 Dividends per share 26.20p 24.00p + 9%

 * Adjusted earnings per share (on a fully diluted basis), probably the
 best indicator of true improvement, were 13 per cent higher at 52.33p.

 * Operating profit was 30 per cent higher at 2,022 million pounds,
 excluding goodwill amortisation and exceptional items, and benefited
 from the inclusion of seven months results for Rothmans combined with a
 good underlying performance.

 * Group volumes increased by 5 per cent to 753 billion. Excluding the
 impact of the merger, volumes declined by 9 per cent, a similar
 position to our major international competitors.

 * Progress on the integration of the Rothmans operations has been
 excellent. The merger has improved the geographical balance of the
 Group and resulted in the Group having a 15.4 per cent share of the
 world market.

 * The Board is recommending a final dividend of 17.9p, up 12 per cent,
 which will be paid on 3 May 2000. This will take the growth in
 dividends for the year to 9 per cent, which is in line with our policy
 of paying out at least 50 per cent of sustainable earnings.

 * The Chairman, Martin Broughton, commented that "As a result of the
 Rothmans merger, we made a major advance in 1999. We also succeeded in
 managing the business on strategy in a difficult environment, a task
 made more complex by the merger. We are disappointed that the real
 progress we have made has not been reflected in our share price."



SOURCE British American Tobacco

Tue, 07 Mar 2000, 5:57pm EST

 British American Tobacco Posts 4th-Quarter Profit
 After Rothmans Purchase
 By Anne Brockhoff

 BAT Posts 4th-Quarter Profit After Rothmans Purchase (Update4)

 (Closes shares in fifth paragraph.)

 London, March 7 (Bloomberg) -- British American Tobacco Plc,
 the world's No. 2 tobacco company, indicated a return to profit
 in the fourth quarter on a 37 percent jump in sales after adding
 Rothmans International SA's Dunhill and other cigarette brands.

 Net income came to 77 million pounds ($121 million), or 2.3
 pence a share, in the fourth quarter, after U.S. tobacco
 settlement costs brought a loss of 177 million pounds, or 11.4p,
 a year earlier. The figures are based on subtraction of full-year
 from nine-month profit.

 The maker of Lucky Strike cigarettes bought Rothmans last
 year to boost its global market share to about 15.4 percent, just
 shy of the 17 percent held by Philip Morris Cos., maker of the
 Marlboro brand. BAT also benefited from the absence of major
 costs for litigation in the last quarter of 1999, though several
 remaining lawsuits threaten future earnings, analysts said.
 ``The results are slightly better than expected,'' said
 Jonathan Fell, an analyst at Merrill Lynch & Co. who has a
 ``buy'' rating on the stock. ``Until we get more clarity on
 (lawsuits), there's not much the company can do.''

 BAT shares fell 13.25 pence, or 4.8 percent, to 261p. The
 stock is down 54 percent from a year ago, cutting its market
 value to about 5.8 billion pounds. Philip Morris, which also owns
 food companies, is worth about $46 billion.

 Another Rothmans?

 To lift BAT's share price, which trades at 11 times its
 earnings, a share buy-back program ``remains on the agenda,''
 Chairman Martin Broughton said. Acquisitions may be another way
 of increasing the industry's profitability.
 ``I don't think we'll need another Rothmans in two years,
 but further concentration is likely to happen,'' Broughton said.
 Mergers between European companies may take a long time as they
 would face obstacles from European Union officials, he said.

 Future earnings are threatened by 537 outstanding tobacco
 litigation cases, though that's down from 678 cases last year.

 BAT's U.S. subsidiary Brown & Williamson, Philip Morris and
 other cigarette makers lost a court appeal aimed at letting the
 companies inform investors about the progress of a Florida class-
 action suit over smoking-related illnesses.

 The trial over the smokers' allegations is now in the
 damages phases, with plaintiffs asking a Miami jury to award
 potentially hundreds of billions of dollars. Brown & Williamson
 does not plan to settle and a verdict is expected in three weeks,
 BAT said.

 Over-Concerned Analysts

 ``Litigation is a cost built into the margins,'' Broughton
 said. Analysts ``are over concerned about litigation. We have
 seen a decline in the number of cases against us.''

 The number of dismissed cases against BAT rose to 254 in
 1999, compared with 170 in 1998, the company said.

 BAT said 1999 net income rose to 556 million pounds, or
 27.02 pence a share, from 346 million pounds, or 21.98p. The
 company said it will pay a full-year dividend of 26.2 pence a
 share, compared with 24.0p a year earlier.

 Excluding one-time gains and charges and goodwill, earnings
 per share rose to 52.33p from 46.12p, more than the 47.5 pence
 forecast by a Bloomberg survey of six analysts.

 Rothmans lifted the volume of cigarettes sold in 1999 by 5
 percent to 753 billion. Excluding Rothmans, BAT's volume declined
 by 9 percent. The company expects the number of cigarettes sold
 this year to be flat against last year's.

 Sales rose 24 percent to 21.6 billion pounds, compared with
 17.3 billion pounds in 1998. Growth was particularly strong in
 Europe, where operating profit almost doubled to 316 million
 pounds after the Rothmans merger. Operating profit in the U.S.,
 which accounts for more than a quarter of BAT's total operating
 profit, rose 1.6 percent to 544 million pounds.

 BAT expects to have reached 75 percent of the costs savings
 of 250 million pounds from the Rothmans purchase this year,
 Broughton said.

Tuesday March 7, 3:20 am Eastern Time

BAT shares light up as profits please

LONDON, March 7 (Reuters) - British American Tobacco Plc shares lit up at
the start of
trade on Tuesday, rebounding from recent lows as profits topped analyst
forecasts and
synergies from its acquisition of Rothmans came in ahead of schedule.

The stock -- which tumbled to eight year lows at one stage last month --
traded 15-3/4
pence or 5.7 percent higher at 290p by 0810 GMT, though volume was a thin
117,740
shares by that time.

The stock has underperformed the UK stock market as a whole by 20 percent s=
o
far this year.

BAT posted a rise in operating profits before exceptionals to 2.002 billion
pounds compared with expectations mostly between
1.94 billion pounds and 1.96 billion, adding that progress on the
integration of Rothmans had been excellent.

``It's a good set of numbers at the top end of the range of forecasts,''
said one market maker.

Tuesday March 7, 2:16 pm Eastern Time

FOCUS-BAT profits sparked up by Rothmans

(Updates with share price close in paragraph three)

By David Jones

LONDON, March 7 (Reuters) - British American Tobacco Plc reported an 86
percent leap in annual pre-tax profits on
Tuesday, fired up its takeover of Rothmans, and then painted a more
optimistic global industry outlook for this year.

BAT added its one-off charge for integrating the Rothmans business would be
higher than first expected, but this meant the
synergy cost savings from last year's deal would come earlier and possibly
be greater than initially forecast.

Its shares puffed higher to 292 pence as profits and the dividend payout
came in above expectations and investors were
encouraged by the added merger benefits. But the stock was later undermined
by a weak overall London stock market and
ended off 13-1/4p at 261p.

The world's second largest cigarette company, which markets brands such as
Lucky Strike, State Express 555 and now
Rothmans, reported pre-tax 1999 profits of 1.371 billion pounds ($2.16
billion) after 738 million pounds a year earlier on
turnover up 25 percent at 21.7 billion pounds.

Underlying operating profits before exceptionals rose 30 percent to 2.002
billion pounds, above forecasts of 1.90-1.96 billion,
while the final dividend was raised 12 percent to 17.9 pence a share to mak=
e
a year payout of 26.2p from 24p.

``The results were positive, but the risk of litigation overhangs the
shares,'' said analyst Jonathan Fell at Merrill Lynch, who was
looking to push his 2000 pre-tax profit forecast up four percent.

BAT's results were boosted by a seven-month contribution from Rothmans,
after a takeover deal last year to create a 13 billion
pound global tobacco group last year, second only in size to Marlboro-maker
Philip Morris Cos Inc (NYSE:MO - news).

Chairman Martin Broughton said underlying 1999 profits, stripping out
Rothmans, were up four percent, beating earlier flat
predictions, and came despite a nine percent market volume fall in the U.S.
due to sharp 60 percent price rises.

Profits were boosted by a strong second half, after an eight percent first
half decline, and it expects a better year in 2000 after
the 1999 world cigarette market declined 2-3 percent due to economic
difficulties and increases in excise taxes.

``Our best assumptions are that 2000 will come out of recession and the
market will be flat against 1999, and this is being
reflected in our trading in the first months of 2000,'' said BAT's managing
director Ulrich Herter in a news conference.

The group said its volumes rose five percent to 753 billion cigarette
``sticks.'' But excluding the merger, volumes were down
nine percent, in line with major competitors such as Philip Morris, RJR
Tobacco (NYSE:RJR - news) and Japan Tobacco .

GREATER SYNERGIES FROM ROTHMANS

He said Rothmans synergies would now likely be higher and come earlier than
the 250 million pounds per year promised by
end-2002. This had been achieved by a 1999 357 million pound restructuring
charge over the deal, which means the planned
400 million charge over three years is set to be exceeded.

Broughton complained despite a double digit 13 percent rise in earnings, th=
e
shares languished on a low rating after topping
670p when the company announced the Rothmans deal in January 1999.

But he appeared to rule any share buy-backs in the short term, after BAT
shares have underperformed the FTSE All Share
index by 20.3 percent and UK tobacco stocks by 8.6 percent over the last 12
months.

On U.S. litigation, Broughton said BAT remains confident that in the event
of a loss in the so-called Engle class action, the
companies involved will be able to appeal successfully and BAT U.S. unit
Brown and Williamson had no intention of settling.

``Yes, litigation is a scare for investors, but we will win the Engle case.
Litigation is an on-going cost and built into our margins,''
said Broughton, adding that BAT spent $140 million in U.S. litigation in
1999.

This action is being heard in a Miami courtroom on behalf of 500,000 or mor=
e
sick smokers in Florida who are claiming
punitive damages from U.S. cigarette makers as high as $200 billion. A
six-person jury is looking to fix potentially massive
damages in around three weeks time.

($1 equals .6358 Pound)

BBC News
 Tuesday, 7 March, 2000, 08:24 GMT
 BAT profits nearly
 double

 Profits at British American Tobacco jumped
 86% last year.

 The growth in profits at the world's second
 largest cigarette company was driven by its
 takeover of Rothmans last year.

 BAT markets brands such as Lucky Strike,
 State Express 555 and now Rothmans.

 Pre-tax profits hit =A31.37bn in 1999 compared
 with =A3738m in the previous year.

 The figure includes seven months trading at
 Rothmans cigarettes.

 Operating profits before exceptionals were
 =A32bn, compared with =A31.55bn in 1998, while
 the full-year dividend was 26.2p, compared
 with 24p earlier.

 Boosted by Rothmans takeover

 Last year's takeover of Rothmans created a
 global tobacco group, second in size only to
 Philip Morris, which makes Marlboro.

 "As a result of the Rothmans merger, we made
 a major advance in 1999," BAT chairman Martin
 Broughton said.

 But he expressed "disappointment" that its
 success has yet to be reflected in its share
 price.

 Its shares have underperformed the benchmark
 UK share index, the FTSE, by 20.3% in the
 past 12 months.

 On Monday, they closed at 274p after a
 setting a high of 675p in January 1999.

 Legal worries

 BAT chairman Martin Broughton admitted
 concern about the World Health
 Organisations's proposed Framework
 Convention on Tobacco Control.

 This convention aims to reduce the spread of
 smoking in new markets around the world and
 is a "potential threat" to its business.

 Many cigarette companies are pinning their
 hopes for future profits on developing
 countries, as the potential for growth in the
 Western world diminishes.

 Mr Broughton described the WHO move as a
 "developed world obsession being foisted on
 the developing world".

 He said there were encouraging signs that
 some countries were in favour of a broader
 convention rather than a binding treaty
 controlling the international tobacco business.

BAT Posts 4th-Quarter Profit After Rothmans
 Purchase (Update4)
 By Anne Brockhoff

 BAT Posts 4th-Quarter Profit After Rothmans Purchase (Update4)

 (Closes shares in fifth paragraph.)

 London, March 7 (Bloomberg) -- British American Tobacco Plc,
 the world's No. 2 tobacco company, indicated a return to profit
 in the fourth quarter on a 37 percent jump in sales after adding
 Rothmans International SA's Dunhill and other cigarette brands.

 Net income came to 77 million pounds ($121 million), or 2.3
 pence a share, in the fourth quarter, after U.S. tobacco
 settlement costs brought a loss of 177 million pounds, or 11.4p,
 a year earlier. The figures are based on subtraction of full-year
 from nine-month profit.

 The maker of Lucky Strike cigarettes bought Rothmans last
 year to boost its global market share to about 15.4 percent, just
 shy of the 17 percent held by Philip Morris Cos., maker of the
 Marlboro brand. BAT also benefited from the absence of major
 costs for litigation in the last quarter of 1999, though several
 remaining lawsuits threaten future earnings, analysts said.
 ``The results are slightly better than expected,'' said
 Jonathan Fell, an analyst at Merrill Lynch & Co. who has a
 ``buy'' rating on the stock. ``Until we get more clarity on
 (lawsuits), there's not much the company can do.''

 BAT shares fell 13.25 pence, or 4.8 percent, to 261p. The
 stock is down 54 percent from a year ago, cutting its market
 value to about 5.8 billion pounds. Philip Morris, which also owns
 food companies, is worth about $46 billion.

 Another Rothmans?

 To lift BAT's share price, which trades at 11 times its
 earnings, a share buy-back program ``remains on the agenda,''
 Chairman Martin Broughton said. Acquisitions may be another way
 of increasing the industry's profitability.
 ``I don't think we'll need another Rothmans in two years,
 but further concentration is likely to happen,'' Broughton said.
 Mergers between European companies may take a long time as they
 would face obstacles from European Union officials, he said.

 Future earnings are threatened by 537 outstanding tobacco
 litigation cases, though that's down from 678 cases last year.

 BAT's U.S. subsidiary Brown & Williamson, Philip Morris and
 other cigarette makers lost a court appeal aimed at letting the
 companies inform investors about the progress of a Florida class-
 action suit over smoking-related illnesses.

 The trial over the smokers' allegations is now in the
 damages phases, with plaintiffs asking a Miami jury to award
 potentially hundreds of billions of dollars. Brown & Williamson
 does not plan to settle and a verdict is expected in three weeks,
 BAT said.

 Over-Concerned Analysts

 ``Litigation is a cost built into the margins,'' Broughton
 said. Analysts ``are over concerned about litigation. We have
 seen a decline in the number of cases against us.''

 The number of dismissed cases against BAT rose to 254 in
 1999, compared with 170 in 1998, the company said.

 BAT said 1999 net income rose to 556 million pounds, or
 27.02 pence a share, from 346 million pounds, or 21.98p. The
 company said it will pay a full-year dividend of 26.2 pence a
 share, compared with 24.0p a year earlier.

 Excluding one-time gains and charges and goodwill, earnings
 per share rose to 52.33p from 46.12p, more than the 47.5 pence
 forecast by a Bloomberg survey of six analysts.

 Rothmans lifted the volume of cigarettes sold in 1999 by 5
 percent to 753 billion. Excluding Rothmans, BAT's volume declined
 by 9 percent. The company expects the number of cigarettes sold
 this year to be flat against last year's.

 Sales rose 24 percent to 21.6 billion pounds, compared with
 17.3 billion pounds in 1998. Growth was particularly strong in
 Europe, where operating profit almost doubled to 316 million
 pounds after the Rothmans merger. Operating profit in the U.S.,
 which accounts for more than a quarter of BAT's total operating
 profit, rose 1.6 percent to 544 million pounds.

 BAT expects to have reached 75 percent of the costs savings
 of 250 million pounds from the Rothmans purchase this year,
 Broughton said.