Questor share tip: Buy BATtimes are still too tough to think of giving up smoking

Published: 7:05AM GMT twenty-six February 2010

British American Tobacco

British American Tobacco

�21.79 -21p

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Questor says BUY

Revenues at the Dunhill-to-Lucky Strike builder were up 17pc to �14.2bn, increased by the group"s acquisitions of Skandinavisk Tobakskompagni in Denmark, Turkish organisation Tekel and Bentoel in Indonesia, whilst pre-tax enlarge climbed 10.7pc to �4.1bn.

The organisation additionally supposing great headlines on cost savings, forward of expectations at �239m. BAT has generated sum assets of �484m over the past dual years opposite a aim of �800m in the 4 years to 2012 following a fibre of acquisitions.

Costs should go on to come down and BAT pronounced it remained on the surveillance for serve takeover targets but warned that pickings are slim with most of the tellurian marketplace already consolidated.

Investors should be captivated by a division produce of 4.8pc and certain gain momentum. The organisation trades on a cost to gain mixed of 13.3 times.

The rarely money generative association pronounced it would compensate a last division of 71.6p on May 6, heading to a total division for the year of 99p, a 19pc increase.

There were drawbacks. Sales volumes incompatible acquisitions fell 3pc in light of the mercantile downturn, down trade and a one after another climb in bootleg trafficking, but the decrease was equivalent by an normal 8pc enlarge in prices. The association warned of a serve 2pc decrease in volumes this year but pronounced it was assured in the capability to lift prices further, adding that it approaching to take marketplace share from rivals.

Richard Burrows, chairman, warned of the risk of rising stagnation in grown markets, but any slack should be equivalent by one after another expansion in rising markets.

Mr Burrows forked to BAT"s "unrivalled geographic spread" as charity insurance from a slack in a little areas.

BAT additionally highlighted a liberation in the tellurian economy, despite with pointy contrasts in between opposite regions. Russia, Japan and Brazil were tough, whilst Uzbekistan, Nigeria and Egypt were between those countries assisting to progress sales.

Three of the company"s 4 expostulate brands that additionally embody Pall Mall and Kent achieved strongly, with sales volumes up an normal of 4pc. Dunhill led the approach with a 9pc increase, but Kent sales fell 4pc.

The shares fell 51p to �21.79 following a new run of great form they have climbed 8pc this year but with the FTSE fortitude to experience volatility, BAT offers a acquire clarity of stability. Buy.