FLUCTUATIONS in foreign exchange rates would again have a major affect on British American Tobacco’s (BAT) results this year, after the strength of sterling and the weakness of the rouble weighed on profit in 2014. Currency movements would have “a significant impact on both a transactional and translational level”, chief executive Nicandro Durante said yesterday, adding that business conditions would remain difficult in 2015. With sales spread across more than 200 markets around the world, BAT is more vulnerable than most to increased volatility in currency markets. The rouble’s plunge in the past year has hurt companies from Carlsberg to PepsiCo, while the weakness of the rand and Brazilian real is taking a toll on international businesses operating there. Adverse currency movements caused a 7.2 percent drop in BAT’s adjusted operating profit last year, a performance that was slightly better than analysts expected, sending the shares higher. Using constant exchange rates, earnings rose 4.4 percent and sales gained 2.8 percent, the company said.
BAT shares were up 2.17 percent on the JSE yesterday to close at R672.36. – Bloomberg