British American Tobacco Says World Coming Out Of Recession

British American Tobacco PLC (BATS.LN) Wednesday said the world is coming out of recession, as the second-biggest tobacco group by revenue recorded a rise in profit and sales driven by robust demand in emerging markets, and the rate of volume decline slowed.

BAT, which competes with U.S.-based global market leader Philip Morris International Inc. (PM) and U.K. peer Imperial Tobacco Group PLC (IMT.LN), is focused on building its position in developing economies such as Eastern Europe, Africa, the Middle East and Asia to offset a weaker performance in developed markets like Western Europe where smokers are struggling with tough economic conditions.

Consumers in mature markets are cutting back on spending in the light of government austerity measures, and switching to low-cost brands. The company has clawed back margin erosion caused by weak volumes and excise tax hikes through raising prices.

The London, England-based maker of Dunhill, Kent, Pall Mall and Lucky Strike said first-half cigarette volumes fell 1% to 344 billion, compared with a 3% drop in the same period a year ago and a 2.4% fall in the first quarter.

Explaining the deceleration, Michael Prideaux, director of corporate and regulatory affairs, said, "On an industry basis, the world is gradually coming out of recession. On a company basis, it is the ability to grow market share."

Prideaux added the share gains are well-spread, including Germany, Russia and Argentina. "We are doing pretty well all round. We look at our top 40 markets and we grew share in 26 of them."

The company improved its position in Spain, where falling demand due to economic woes led to a price war, even though it only has a small market share in the country.