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 two largest international tobacco companies, and its "intermediate" financial risk profile. BAT's key business strengths include its resilient profitability and cash generation, and its exceptional geographic diversification. We see the group's brand equity, which acts as a barrier to entry, along with its relatively low capital intensity and rising incomes in emerging markets, as major supports to cash flow generation. These strengths are offset to a degree by declining volumes, as well as rising consumer price sensitivity in mature markets. Further rating constraints are the tobacco industry's exposure to shifts in the
