British American Tobacco (BAT) said first-quarter profits had nudged ahead, despite a slump in volumes across the world.

The Lucky Strike-to-Dunhill operation, which employs about 600 at its Rothmans factory in Darlington, has seen sales fall as smokers switch to cheaper brands in light of the tough global economic climate. Its four global brands, which include Kent and Pall Mall, achieved overall growth of three per cent in the first three months of the year, but total group volumes fell six per cent.

BAT's Latin America markets were particularly badly hit by the tough economic conditions, with all markets except Venezuela and the Caribbean seeing a decline in volumes. In Argentina, volumes were lower and profits were halved as a result of the country's crisis.

Overall, group revenues for the first quarter reduced from £6.13bn to £5.96bn. Yet pre-tax profits increased from £467m to £472m.

Chairman Martin Brough-ton said BAT was focusing on "shifting the mix of our business towards the growing and more profitable sectors".

Despite an overall sales slump, not all countries were hit by declining volumes during the first quarter.

In South Korea, demand for Dunhill Lights drove a "substantial" increase in profits and volumes.

Vietnam, Cambodia and Bangladesh also showed "robust" growth in volumes, while higher margins in Australia, Malaysia and Pakistan helped boost profits.

In Europe, total profits were down £2m at £111m while regional volumes fell five per cent, mainly as a result of reductions in Russia and the UK. In Germany, however, volumes were up as Lucky Strike, Pall Mall and Gauloises Blondes all gained market share, while price increases in Switzerland and France and higher margins in Belgium and Italy boosted profits.

In Russia there was "strong" profit growth despite the fall in sales as premium and mid-price brands gained market share in key cities such as Moscow