British American Tobacco (BATS.L), the world's No 2 cigarette maker, reported a 1.8 percent drop in underlying first-quarter volumes but said it was managing to raise prices despite challenging trading conditions.
The London-based group, which makes Kent, Dunhill, Lucky Strike and Pall Mall cigarettes, said on Thursday that overall group volumes dropped 2.4 percent to 164 billion cigarettes from 168 billion a year earlier.
Volume declined significantly in markets such as Spain, Mexico, Australia and Vietnam, the company said, noting however that it had grown market share in all those markets.
"British American Tobacco has made a good start to the year and our rate of organic volume decline is slowing," Chief Executive Nicandro Durante said in a trading update.
Its top four "global drive" brands saw volumes grow 9 percent, led by Kent which grew by 16 percent, driven by growth in Russia, Japan, South Korea, Romania and Ukraine.
"This good performance was achieved in trading conditions which remain challenging, with industry volumes markedly lower in a number of markets," the company said.
"There were higher than expected shipments to Japan, where the environment remains highly uncertain following the devastating earthquake."
The 1.8 percent drop in BAT's first-quarter underlying volume compared to European rival and the world No 4 Imperial Tobacco (IMT.L) which reported a 1 percent dip in its October-March half-year cigarette volumes [nLDE72M1FH].
In February, BAT's resumed share buyback and upbeat 2011 outlook failed to offset concern about declining cigarette volumes with underlying volumes off 3 percent in 2010 but these were offset by price rises to see overall annual sales up 5 percent. [nLDE71K1QO] (Reporting by Paul Hoskins, Editing by Matthew Scuffham)
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