The ratings on U.K.-based British American Tobacco PLC (BAT) reflect Standard&Poor's Ratings Services' views on the group's strong position as one of the world's two largest international tobacco companies, resilient profitability and cash generation, and exceptional geographic diversification. Our sector rating methodology highlights brand equity acting as a barrier to entry, relatively low capital intensity, and rising incomes in emerging markets as major factors positively affecting cash flow generation in the global tobacco industry. These strengths are offset by declining volumes, as well as rising consumer price sensitivity in mature markets, the tobacco industry's exposure to shifts in the regulatory framework, tobacco taxation, litigation risks, and BAT's intermediate financial risk profile. On June 30, 2011, BAT had adjusted
