Dividend up after BAT's flying start to the year

British American Tobacco today raised its dividend by nearly a fifth after a better-than-expected start to the year.

The world's second-largest tobacco group declared an interim payment of 33.2p a share, up 19% on the 27.9p it paid at the same stage last year.

Revenues in the first six months of the year jumped 8% to £7.3 billion. Profits were up by the same amount to £2.27 billion.

"We get the feeling we're coming out of the recession stronger than we went into it," said BAT's director of corporate and regulatory affairs Michael Prideaux.

The company, which makes cigarette brands such as Dunhill, Kent, Lucky Strike and Pall Mall, said it was able to raise some prices and had increased market share.

Chairman Richard Burrows said: "While the comparisons with 2009 will become tougher in the second half, shareholders should see another year of good growth in both earnings and dividends."

Stripping out acquisitions, volumes for the half were down 3% after a 4% slump in the first quarter and a 1.9% slump in the second. BAT hopes sales will be down less than 2% in the second half.

The firm has been hit by sharp increases in tobacco duties in countries such as Romania, Turkey, Japan and Pakistan which has encouraged illicit trade.