British American Tobacco chairman Jan du Plessis has hit out at bans on smoking in public places, such as those introduced in Ireland and New York as BAT released news of modest half-year profits today.
“The provision of smoking and non-smoking areas or the installation of good ventilation systems should be more than capable of accommodating both non-smokers and smokers,” he said.
BAT reiterated warnings that tough trading in Canada and the effect of the weak US dollar would hit second-half profits.
The group said sales of its four key products – Kent, Dunhill, Lucky Strike and Pall Mall – fell by 1% in the first half, although operating profits rose by 1% to £1.35bn (€2bn) in the six months to June 30.
The London-based group said it was still confident in the underlying strength of the business, whose long-term prospects were recently boosted by a deal to start manufacturing in China.
At constant exchange rates, operating profits before exceptional items would have been 7% higher. This compared with a 9% increase in operating profits during the first quarter.
Du Plessis said the impact of the weak dollar would continue to hit results in the second half. Trading in Canada, which has been hit by increases in tax on cigarettes, would also “significantly” impact on results.
He said: “We expect these factors will negatively impact earnings in the second half.”
BAT, which employs 85,000 staff worldwide including some 1,500 in the UK, has felt the impact of tax hikes in Canada on its more expensive brands.
Earlier this year it lowered the price of one brand, Matinee, in a bid to fight off competition in the market. But this is expected to contribute to lower second-half profits.
The group warned in February that profits for this financial year may be adversely affected by currency fluctuations.
But BAT received a boost in May when regulators allowed it to merge its US subsidiary Brown & Williamson with larger rival RJ Reynolds.
Earlier this month it emerged the group would become the first foreign company to manufacture cigarettes in China, after being given approval to set up a factory capable of producing 100 billion cigarettes a year.
The company said today that these developments were important steps in improving its long-term prospects.
Brown & Williamson saw profits fall by 13% to £110 million during the first half after it was hit by adverse exchange rates.
In Europe, profits rose by £77m (€116.5m) to £339m (€512.8m), mainly due to the acquisition of an Italian company. The region also benefited from cost savings after the reorganisation of factories in the UK.
At the bottom line, group pre-tax profits were 25% higher at £941m (€1.4bn), reflecting higher one-off restructuring costs in the same period last year. Cigarette volumes were 3% higher at 396 billion.
Shares fell by 2% or 21.5p to 821.5p.