Top story

British American Tobacco (BATS) has reported a 6.2% fall in full year revenues as currency movements took a huge chunk out of the cigarette giant’s earnings.

Group revenue was up by 5.4% at constant rates of exchange to but reported revenue was down 6.2% to £13.1bn as a result of adverse exchange rate movements against the pound.

Cigarette volume fell by 0.5% to 663 billion, an organic decline of 0.8% excluding the acquisition of TDR in Croatia, against an estimated industry decline of 2.3%. Total tobacco volume was 0.8% lower

Adjusted Group profit from operations increased by 4.0% at constant rates of exchange. Excluding the transactional effect of foreign exchange on raw materials and leaf this would have been an increase of around 10%. Adjusted group profit from operations was down by 7.6% at current rates to £5bn.

Profit from operations, at current rates of exchange, was 0.2% higher at £4,557 million, impacted by adverse exchange movements, on a translational and transactional level. Without the impact of currencies operating margin would have improved by 160 basis points, but on a reported basis it fell 60 basis points to 38.1%.

Richard Burrows, chairman, commented: “The group had an excellent year in 2015, despite a challenging external environment. Led by growth across all of our Global Drive Brands, the group delivered another year of very good revenue and profit growth at constant rates of exchange. Despite significant currency headwinds impacting reported results, the excellent underlying performance of the group in 2015 and the increase in our total dividend for 2015 to 154p are testimony to the strength of the business, our strategy and our confidence in the future.”

British American Tobacco shares were down 1% in morning trading to 3,796p.

Morning update

German household and beauty company Henkel has reported its full year results this morning with strong increases in sales and earnings. Full year 2015 sales were up 10.1% to €18bn with organic growth of 3%. Operating profit was up 12.9% to £2.9bn and EBIT margin increased by 40 basis points to 16.2%.

CEO Kasper Rorsted said: “2015 was an excellent year for Henkel. We recorded double-digit growth rates in sales, profits, earnings per share and our proposed dividends. All three business units delivered solid organic growth and significantly improved their profits. Emerging markets continued to be the main growth drivers contributing to our good performance. We also achieved further organic sales growth in mature markets.”

For the full fiscal year 2016 Henkel expects organic sales growth of 2% to 4%, adjusted EBIT margin to rise to approximately 16.5% and adjusted earnings per preferred share to grow between 8% and 11%.

As the markets closed last night Unilever announced that Marijn Dekkers will succeed Michael Treschow as chairman. Dekkers is currently Chief Executive Officer of Bayer AG and, as announced by Bayer AG earlier today, he will step down from this role at the end of April. He will be nominated for election to the Boards at the Annual General Meetings in April 2016. Michael Treschow will retire from Unilever at the 2016 AGMs after having served Unilever’s usual maximum tenure of nine years as chairman.

Elsewhere, The Grocer this morning has the story that Historic Kendal Mint Cake manufacturer Wilson’s has ceased trading with the loss of more than 120 jobs after collapsing into administration for the second time in nine months.

The FTSE 100 has kicked off the day in better shape after a rally of US shares last night, climbing 1.5% back to 5,955.8pts so far this morning.

A number of names have clawed back losses of the past two days, with Tesco (TSCO), up 2% this morning to 180.2p, Sainsbury’s (SBRY) up 1.4% to 251.1p and Unilever (ULVR), up 1.2% to 3,075p all on the up so far this morning.

British American Tobacco is so far one of the FTSE’s few major fallers, starting the day 1% down to 3,796p.

Yesterday in the City

Wednesday was another downbeat day in the City as the FTSE slumped by 1.6% to 5,867.2pts having surged through 6,000pts earlier this week.

The pound dropped below $1.40 against the dollar during the day amid more uncertainty over the UK’s potential exit from the EU and worries over global economic growth.

The notion that Brexit could hurt UK retailers has seen the grocery sector suffer in the past two days. Tesco (TSCO) was once again on the major FTSE grocery/fmcg fallers, dropping 1.6% to 176.7p, while Sainsbury’s (SBRY) was down 1.5% to 247.6p and Marks & Spencer (MKS) was down 1.3% to 412p.

Other fallers included Nichols (NCLS), down 2.9% to 1,245p, Hilton Food Group (HFG), down 2% to 505p and Coca-Cola HBC (CCH) after its recent rises, dropping 1.4% to 1,438.2p.

Some retailers survived the day in tact however, with Morrisons (MRW) up 0.9% to 183.8p, Poundland (PLND) up 1.3% to 176.9p and Greggs (GRG) up 1.1% to 1031.9p.

Household goods manufacturer McBride (MCB) jumped 10% to 170p after its cost cutting efforts drove higher than expected full year earnings yesterday, while Kerry Group (KYGA) was up another 3.2% to €76.22 after its revenue and profit growth on Tuesday.