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BAT profit rises 11%
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February 28, 2001: 6:40 a.m. ET
Rothmans integration boosts world No. 2 cigarette maker's profit to $2.2B
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LONDON (CNN) - British American Tobacco, the world's No. 2 listed cigarette maker, posted an 11 percent rise in its full-year pretax profit on Wednesday.
BAT said cost savings from the integration of Rothmans helped increase its profit to £1.52 billion ($2.207 billion) in the year ended December 31, up from £1.37 billion in the previous year.
The maker of Lucky Strike and Dunhill said it saved £230 million in operating costs as a result of the Rothmans purchase.
Analysts polled by Reuters had expected pretax profit between £1.59 and £1.76 billion because most had not factored in the full cost of restructuring the firm's U.S. operations.
 BAT (BATS) shares rose 4.5 percent at 562 pence in London.
Volumes rose by 7 percent to 807 billion cigarettes, helped by growth the four main brands—Lucky Strike, Kent, Dunhill, and Pall Mall. On a comparable basis volumes fell by 2 percent, BAT said.
"These strong results reflect the first full year of the enlarged British American Tobacco Group and have been achieved by meeting our objectives of growth in international brands, improvements in margins and synergies from the merger," Martin Broughton, BAT chairman said in a statement.
"Although the world market was basically stable during 2000, our international brand volumes have grown," he said.
Operating profit, a measure of a company's underlying profitability excluding goodwill, amortisation and one-off gains, rose 27 percent to £2.58 billion. The figure included the Rothmans' contribution and the impact of currency exchange fluctuations.
BAT took a £119 million charge for the restructuring of its U.S. unit Brown & Willamson to cover the costs of early retirement, redundancies, and writing down of assets.
BAT has a world market share of over 15 percent, just behind the world's biggest tobacco company Philip Morris (MO: Research, Estimates).
"They got much more than expected in savings from the Rothmans merger, which is very encouraging," said analyst Nyren Scott-Malden at house broker Credit Suisse First Boston, who has a "buy" recommendation on the stock.
--from staff and wire reports 
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