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Sentiment for cigarette giant British American Tobacco (BAT) is getting unceremoniously stubbed out. From a local perspective one might argue that the strong(er) rand environment is muting market enthusiasm for the group — but BAT is down about 20% on the London Stock Exchange over the past three months and down only about 17% on the JSE over the same period. I have a restless relationship with BAT. I detest smoking, but acknowledge — once I have scrunched up my scruples — that the BAT business is capable of sustaining smouldering returns for many years to come. What’s more, the quarterly dividend policy feeds my yield habit. What I find encouraging in BAT’s recent financial report is that early indications suggest the acquisition of Reynolds America helped reinforce margins. BAT CEO Nicandro Durante reported that, after two years of decline, the enlarged group returned to operating margin growth. The underlying margin improved by 110 basis points. The group’s pricing power looks re...

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