British American Tobacco (BAT), the world’s second-biggest cigarette maker, said that its third-quarter earnings were up by 17 per cent as Eastern European countries started smoking more premium brand cigarettes.

The company, which makes Dunhill, Kent, Pall Mall and Lucky Strike cigarettes, said that it is continuing to perform well despite the downturn in consumer spending on other goods.

Paul Adams, chief executive of BAT, said: “It would be foolish to ignore the fact that the economic situation may have an impact on us, but at the moment we are not seeing that impact and it’s difficult to predict.”

Volumes of cigarettes sold rose an underlying 1 per cent in the first nine months of 2009 after rising 1 per cent in the first-half, compared to its 1 to 1.5 per cent annual growth target. The top four brands were up 17 per cent, boosted by strong growth in Russia and Romania.

Sales also benefited from the purchase of Turkish tobacco manufacturer Tekel for $1.72 billion, and the £1.15 billion purchase of the cigarette businesses of Skandinavisk Tobakskompagni, the Danish owner of Prinz cigarettes, earlier this year.

Profits fell in Latin America, following price rises in Mexico and Venezuela caused by excise duty increases.

Mr Adams said that the company was “pretty strong” on liquidity with a £1.57 billion debt facility, so it is able to make further acquisitions when they arise.

Philip Morris and Reynolds American have also posted better than expected results in recent weeks, indicating that people in many countries are continuing to spend money on cigarettes.

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