British American Tobacco said Thursday that its 2016 profits were boosted by a pre-Brexit decline in the pound, as the group awaits completion of its take-over of US peer Reynolds. Net profit rose eight percent to £4.85 billion ($6.0 billion, 5.7 billion euros) last year, BAT said in an earnings release. Group revenue climbed almost 13 percent to £14.75 billion, helped by "weakness of sterling," BAT said. With the maker of Lucky Strike cigarettes making vast sums from sales denominated in euros and dollars, BAT's profits are inflated once converted into sterling.
The results update comes one month after BAT agreed to pay almost $50 billion (47 billion euros) for control of Reynolds American in a move that targets the lucrative United States market and the fast-growing e-cigarette sector. "I am very pleased that we reached an agreement... in relation to the acquisition of the remaining 57.8 percent of Reynolds American that the group does not currently own," BAT chief executive Nicandro Durante said. "This is a significant step towards the completion of this transaction and we look forward to putting the recommended offer to shareholders."
Shares in BAT, whose cigarette brands include also Dunhill and Kent, rose 0.4 percent to stand at £50.18 in midday deals on London's FTSE 100 index, which was flat overall. "British American Tobacco's final results show that it has benefited from the weakness of sterling and shareholders stand to gain from a 10 percent rise in dividends as a result," said Ian Forrest, investment research analyst at The Share Centre.
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