BAT earnings up 17 percent as 2008 starts well

By David Jones

LONDON (Reuters) - British American Tobacco (BATS.L), the world's second biggest cigarette maker, posted a bumper 17 percent rise in first-quarter earnings on Wednesday as 2008 got off to a great start which helped to boost its shares.

The company, which makes Lucky Strike, Kent, Dunhill and Pall Mall cigarettes, said it saw profits growth in all its regions and benefited from currency translation as the pound was weaker against most of the world's major currencies.

Chairman Jan du Plessis said 2008 had clearly got off to a great start and the group was well placed for the rest of the year helped by its wide spread of businesses in both developed and developing markets across the world.

The cigarette giant reported adjusted diluted earnings per share of 28.44 pence, during in the first three months of 2008, largely in line with earnings forecasts ranging from 26.4p to 29.9p with a consensus of 28.2p in a Reuters poll.

BAT shares rose 2.8 percent to 19.92 pounds by 9:37 a.m. to be the top gainer in a firmer FTSE 100 index .FTSE.

"Maybe there is a consumer slowdown in Europe, but we have not seen it yet. The spread of our businesses should help protect us for the worst," BAT spokesman Michael Prideaux told Reuters after the results.

BAT said its cigarette volumes rose 1 percent in the first quarter, within its 1 to 1-1/2 percent annual growth target, but its more expensive cigarettes grew faster with its premium brands up 6 percent and its top four brands 23 percent ahead.

"Once again, BAT has shown that it can drive price mix to offset the inherently pedestrian volumes of a tobacco business. We like the exposure to emerging markets and the best in class marketing and cost savings programme," said Citi analyst Adam Spielman.