British American Tobacco beat forecasts with a 9% rise in first-half earnings on Thursday, but said profits growth would slow in the second half due to excise tax rises and increased investment.
BAT, the world's second-biggest cigarette maker after Altria's Philip Morris and which makes Lucky Strike, Kent, Dunhill and Pall Mall cigarettes, posted first-half adjusted diluted earnings per share of 53.51 pence ($1.10), ahead of analysts forecasts of 50.3 to 53p and a consensus of 51.9p in a Reuters poll.
Chairman Jan du Plessis warned that there have recently been significant excise tax rises in a number of key markets while the level of investment in its distribution to roll out its top cigarette brands is set to rise over the next few months.
"We therefore expect our growth in profit from operations at comparable rates of exchange to slow in the second half of the year," he said in a results statement.
First-half operating profits rose 13% to 1.492 billion pounds, while its dividend was up 18% to 18.6p.
BAT reported cigarette volumes fell 2% in the first-half to 330 billion cigarettes, after a 3%volumes fall in the first-quarter.