The ratings on U.K.-based British American Tobacco PLC (BAT) reflect Standard&Poor's Ratings Services' view of the group's "strong" business risk profile, as one of the world's leading international tobacco companies, and its "intermediate" financial risk profile. BAT's business strengths manifest through its resilient profitability and cash generation, strong market position, and its broad geographic diversification. We believe cash flow generation will continue to be supported by rising incomes in emerging markets and by the group's relatively low capital intensity and strong brand equity, which acts as a barrier to entry. These strengths are partially mitigated by declining volumes and rising consumer price sensitivity in mature markets. Further rating constraints are the tobacco industry's exposure to shifts in regulatory
