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Wednesday, 28 February, 2001, 12:03 GMT
Tobacco firm repackages itself
Cigarettes
British American Tobacco sold 807 billion cigarettes last year
British American Tobacco, the cigarette giant under investigation in a smuggling probe, has drawn up ethical benchmarks in a drive to improve its public image.

BAT, facing anti-smoking legislation and opposition from health promotion campaigners, has laid down conduct guidelines in an effort to promote itself as a "responsible tobacco group".

The company said it would measure future strategy against risk information, risk reduction and "business integrity" factors.

"We are well aware of the public policy challenges we face," said chairman Martin Broughton as he unveiled the firm's year-end results.

"However, we are confident that we can manage them by reassuring reasonable stakeholders that we are running the business in a responsible way."

Legal action

The statement failed to give any further details of the probe launched by the UK government in October over allegations that BAT had been involved in tobacco smuggling.

Martin Broughton, chairman, British American Tobacco
Martin Broughton: "We are aware of public policy challenges"

And it revealed that the firm faced an increasing burden of legal actions brought by smokers claiming damages over health claims.

BAT was defending 4,740 cases at the end of last year in the US alone, compared with 537 at the close of 1999.

These include an action bought by the US government, claiming compensation for healthcare and welfare costs allegedly incurred assisting patients harmed by smoking.

About 3,000 of the cases relate to a class action suit, bought by flight attendants, which BAT said it had settled "on terms that allow compensatory but not punitive" damage claims.

Key appeal

The firm is appealing against awards in another class action suit, in which three claimants were awarded compensation of $12.7m.

BAT's US subsidiary, Brown & Williamson, was also fined $17.6bn in punitive damages, with other tobacco firms fined a total of $127bn.

While BAT admitted it was impossible to be certain of courtroom victory, it said it was mounting a robust defence in all cases.

"The company believes that the defences... to all these various claims are meritorious both on the law and the facts, and a vigorous defence is being made everywhere," the results statement said.

Restructuring

Pre-tax profits rose 11% to 1.52bn in the year to the end of December, with the number of cigarettes sold exceeding the 800 billion mark, the briefing revealed.

The firm achieved "great progress" in Europe, where revenues rose 18%, with trade in Russia, Ukraine and Romania particularly strong.

But while the firm claimed more than half of the Latin American market, a slump in US trade saw American operations contribute 495m to profits last year, 18% down on 1999.

Brown & Williamson in September announced a restructuring, spelling redundancy or early retirement for many staff, in a drive to cut costs.

In the City, BAT shares stood 26.25p up at 565p at 1110 GMT.

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See also:

06 Feb 01 | Business
Tobacco firm wins court case
14 Jun 00 | Health
Tobacco industry under attack
01 Feb 00 | Americas
Tobacco giant denies smuggling links
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