British American Tobacco plc: Quarterly Report to 31 March 2007

LONDON, May 3 /Xinhua-PRNewswire/ --

SUMMARY

THREE MONTHS 2007 2006 Change

RESULTS

Revenue GBP2,232m GBP2,297m -3%

Profit from GBP684m GBP616m +11%

operations

Adjusted diluted 24.31p 22.05p +10%

earnings per

share

-- The reported profit from operations was 11 per cent higher at GBP684 million, or 6 per cent higher if exceptional items are excluded. However, the results from all the regions were adversely impacted by exchange. Profit from operations, excluding exceptional items, would have been 18 per cent higher at comparable rates of exchange, with all regions contributing to this strong result except for America-Pacific which was slightly lower than last year.

-- Group volumes from subsidiaries were 156 billion, a decrease of 3 per cent, mainly as a result of the high level of trade buying in some markets at the end of 2006, supply chain disruptions in the Middle East and the loss of StiX in Germany. The Group saw share improvements across many markets, particularly for its global drive brands. The four global drive brands achieved an overall volume growth of 6 per cent. The reported Group revenue was 3 per cent lower at GBP2,232 million but, at comparable rates of exchange, would have increased by 6 per cent as a result of more favourable pricing and better product mix.

-- Adjusted diluted earnings per share rose by 10 per cent, benefiting from the increase in profit from operations, an improved contribution from associate companies, lower net finance costs, a lower tax rate and the impact of the share buy-back programme, partly offset by a higher minorities charge.

-- The Chairman, Jan du Plessis, commented "We have started the year with strong growth in both revenue and operating profit at comparable rates of exchange, as a result of improved pricing and cost savings. In addition, the first quarter has been somewhat flattered by excellent performances in Brazil and South Africa. Looking ahead, it is worth remembering that earnings per share benefited from a number of one-off factors in the second quarter of 2006. For the year as a whole, adverse exchange rates are expected to hold back our earnings per share growth."