British American Tobacco has reported a 20 per cent rise in first-half earnings, boosted by foreign exchange gains and timing of shipments which it said would reverse in the third-quarter.
London-based BAT, which makes Lucky Strike, posted adjusted earnings per share of 49.11 pence for the first six months of 2006, ahead of forecasts of between 46.1 pence and 46.6 pence.
Favourable exchange rates for the American and Canadian dollars and South African rand contributed to a third of the growth in EPS. Without the lift operating profits would have grown nine per cent.
"That's quite a tailwind, which will become a headwind in the third quarter," said BAT's commercial director Michael Prideaux.
And without the impact of stock building in Japan and South Africa ahead of price rises, profit growth would have been closer to seven per cent, he revealed.
The world's number-two cigarette company after Altria's Philip Morris said its like-for-like volumes grew three per cent in the first half, after a three per cent rise in the first quarter and two per cent for full-year 2005.
"The results for the first six months have, however, been flattered by significant foreign exchange gains, which are unlikely to continue, as well as by the timing of shipments in some major markets which will inevitably reverse during the third quarter," said chairman Jan du Plessis.
BAT added that its subsidiary in Chile intends to acquire the remaining 29.63 per cent share in Chiletabacos that BAT does not already own. It values the minority stake at around £104 million.
The half-year dividend was raised 12 per cent to 15.7 pence.