[Intl-tobacco] BAT Interested in Stake in Bulgartabak

[Robert Weissman]

Financial Times
BULGARIA: British American Tobacco Rules out Full Purchase of Bulgartabak

2004-04-28 13:40:42

British American Tobacco confirmed that it would be participating in the bi=
dding
process for Bulgartabak, the state owned tobacco assets of Bulgaria.

But BAT, which last year spent =A31.6bn on acquiring ETI, the Italian cigar=
ette
company, and whose brands include Lucky Strike, Dunhill and Pall Mall,
ruled out a
wholesale purchase of Bulgartabak.

Paul Adams, chief executive, said: "We are interested in Bulgaria, but
we would be
interested in parts of it, rather than the whole lot and they seem more rec=
eptive
to that." The auction process, which should attract interest from most
of the large
tobacco groups, will begin next month and is expected to be completed by
the end of
the year.

News of BAT's expansion plans, which could go a small way towards
eliminating the
gap between it and its closest rival Philip Morris, came as the group
sounded a
cautious note over growth in the US and parts of Europe, despite
better-than-expected first-quarter results.

Mr Adams warned that BAT might have "seen the best of profitable growth"
in the US
during the first quarter, adding that the remaining nine months of the
year would
be relatively flat. In the first quarter, the US raised profits by 21
per cent to
=A346m, helped by cost cutting. The US performance went some way to
offsetting the
well-flagged difficulties of higher taxes and increased competition that ca=
used
profits to drop 13 per cent to =A383m in Canada.

Michael Smith, of JP Morgan said the news from the US would be more than
offset by
the strong growth coming from emerging markets such as Russia, India and Pa=
kistan.
Mr Smith held his full-year profit forecast at =A32.59bn.

In the three months to March 31, pre-tax profits dipped to =A3454m
(=A3468m), as the
weak US dollar hit profits. Turnover rose from =A35.87bn to =A37.85bn
powered by ETI,
whose better-than-expected performance also helped cigarette volumes
move up 5 per
cent to 192bn.

Basic earnings per share were lower at 10.53p (10.83p), but the buy-back pr=
ogramme,
which has seen the group spend =A3197m buying 24m shares, caused diluted ad=
justed
earnings per share to rise 6 per cent to 15.59p.