British American Tobacco (BAT) reported a 2 per cent rise in 2002 pre-tax profits today.
It also launched a big share buyback of up to £1 billion sterling ($1.6 billion) - which it said would not hinder it from making a major acquisition.
The world's second-biggest cigarette maker said the buy-back would take around one year to complete that 27.7 per cent-shareholder R&R Holdings would not take part.
The BAT group hit its target of high single-digit earnings per share growth for 2002 with an 8 per cent increase, but a cigarette price war in the United States and weaker dollar has persuaded the company not to give a target for 2003.
BAT said it is planning to cut overheads and indirect costs to achieve real annual savings of £200 million in five years' time.
It reported 2002 pre-tax profits of £2.113 billion sterling, in line with forecasts.