Cigarette manufacturer British American Tobacco (BAT) has reported a 26% slump in full-year profits to £1.56bn.
Profits growth stubbed out as disposal costs bite
The group behind Lucky Strike, Kent, Dunhill and Pall Mall cigarettes blamed one-off costs and losses from the sale of some of its businesses.
BAT, which is merging its US unit with RJ Reynolds, also warned that profits would be hit by the weak dollar
The group said it is confident that the US merger will be completed by the middle of 2004.
Operating profits at the tobacco giant rose 4% to £2.78bn, after stripping out restructuring costs and losses on disposals, with sales volumes up by 2% to £792bn.
Sales at its global brand leaders - Kent, Dunhill, Lucky Strike and Pall Mall - rose by 13%, the company said.
Chairman Martin Broughton said: "We expect the real momentum in our business to continue during 2004, although at current exchange rates the growth in profit would be adversely affected when translated into sterling."
The latest results are unlikely to ruffle the feathers of shareholders as shares in BAT have rallied 20% since it merged its Brown & Williamson US unit with RJ Reynolds.
The group has also raised its full-year dividend by 10% to 27p per share.
Merger on target
However, some analysts are concerned BAT, which will take a 42% stake in the merged business, may have to sell-off some of its brands if it wants to squeeze the deal past US authorities.
But the group has assured investors that disposals will not be part of the RJ Reynolds merger and that the deal is progressing "as planned".
BAT also said it planned to buy-back 60 million shares in the next six months, with "headroom" for another 120 million.