BAT looks to double number of vaping products markets

(Reuters) - British American Tobacco wants to double the number of countries where it sells vaping products this year and again in the next, it said on Thursday, after the world's second-largest tobacco company saw full-year sales volumes rise only slightly.

BAT and its rivals, including Philip Morris International and Japan Tobacco International, have been investing in cigarette alternatives as a growing health consciousness reduces smoking rates, and economic instability curbs consumer spending.

BAT is preparing to buy its U.S. peer Reynolds American Inc for $49.4 billion, a takeover that will create the world's biggest listed tobacco company and boost BAT's position in the small but growing market for e-cigarettes and other cigarette alternatives.

BAT said on Thursday it now has the biggest "vapour" business in the world outside of the United States and is present in 10 markets, with almost 40 percent of the market in Britain and around 50 percent in Poland.

The company plans to double the number of markets where it offers cigarette alternatives this year, and again next year, its Head of Corporate Affairs Jerry Abelman said.

"In the future we expect to see a much bigger percentage coming from next generation products," he told Reuters on Thursday, but declined to give any figures. The maker of Dunhill and Lucky Strike cigarettes said cigarette volume grew 0.2 percent to 665 billion in 2016, adding that although it fell 0.8 percent on an organic basis as more people around the world cut back on smoking, it outperformed the industry which estimated a roughly 3 percent decline.

Revenue grew 12.6 percent to 14.751 billion pounds ($18.35 billion), helped by the weakness of the British pound. Organic revenue was up 6.9 percent, driven by good pricing.

Adjusted profit from operations also rose 9.8 percent to 5.480 billion pounds.

($1 = 0.8037 pounds)

(Reporting by Esha Vaish in Bengaluru, Emma Thomasson in Berlin and Martinne Geller in London. Editing by Jane Merriman and Susan Thomas)