Continuing tough US markets hit trading at tobacco giant British American Tobacco (BAT) in the past three months.

The group, which yesterday found itself the subject of a Department of Trade & Industry investigation into allegations of smuggling, said conditions in the US were very difficult.

Pre-tax profits in the three months to September 30 slipped to £511 million, against £552 million at the same point last year.

And on a nine-monthly measure, pre-tax profits were virtually static, at £1.22 billion, against £1.21 billion the time before.

However, on both counts revenues were up - to £19.03 billion, against £15.06 billion in the nine-month period, and £7.13 billion against £6.73 billion in the three months.

Chairman Martin Broughton said: "More rapid progress could be made if regulators who are seriously interested in practical tobacco policy could come to see the tobacco industry as part of the solution, ratherthan as part of the problem."