BAT in 1.25 bln buyback as earnings rise

British American Tobacco , the world's second-biggest cigarette maker, increased its share buyback to 1.25 billion pounds ($1.96 billion) after it raised prices and saw strong growth in emerging markets to help boost its annual earnings.
The London-based maker of Kent, Dunhill, Lucky Strike and Pall Mall cigarettes completed a share buyback of 750 million pounds in 2011 and is increasing the amount for 2012 as it is confident of growth ahead for its shareholders.
The group is seeing smoking levels decline in Western Europe and North America, but is offsetting this by increasing its cigarette prices and making gains from strong growth in developing markets such as Russia, Romania and Pakistan.
"The economic climate around the world is far from settled but we remain confident that our strategy should continue to generate growth for our shareholders in the years ahead," said Chairman Richard Burrows in a statement on Thursday.
Faced with falling cigarette volumes in mature markets, the group has hiked prices, so although global underlying volumes fell 0.4% revenues in the year rose 3% to 14.4 billion pounds — compared to the world's largest cigarette group Marlboro-maker Philip Morris, which saw its underlying 2011 volumes rise 0.5%.
BAT is the most globally spread of the big tobacco groups but has not been immune from tough economies, excise tax rises and higher unemployment which have pushed smokers to give up or switch to cheaper — and sometimes illicit — cigarettes.
The group, which made 705 billion cigarette last year, posted a rise of 11% in 2011 adjusted diluted earnings per share to 194.6 pence narrowly ahead of a company compiled consensus of 194.3p and a ThomsonReuters forecast of 193.9p.
The full-year dividend, which is set at 65 percent of earnings, also rose 11% to 126.5p a share.
Rival and world No 4 Imperial Tobacco said its fourth quarter volumes fell 7% and price rises did not prevent its sales dipping 1% as the group was hit by a tough Spanish market, Syrian sanctions and destocking in Ukraine and the U.S..