BAT Q2 Net Profit Rises on Better Product Mix

Source from:  The Star 07/24/2009

PETALING JAYA: British American Tobacco (M) Bhd (BAT Malaysia) posted a 3.1% increase in net profit to RM201.24mil in the second quarter ended June against a year earlier following an improved product mix and as it benefited from the implementation of a variety of productivity and cost management initiatives. Earnings per share also improved 3.1% at 70.5 sen against 68.4 sen in the previous corresponding period. However, revenue was down 3.6% at RM977.65mil against RM1.01bil previously. The tobacco group also declared a first interim dividend of 113 sen per share for the financial year ending Dec 31, 2009. On its outlook for the rest of the year, BAT Malaysia said it would be "satisfactory at best" due to the economic slowdown and continuing pressure from the sale of illicit cigarettes. "Our strategic imperatives on growth, productivity, responsibility and winning organisation have laid a strong foundation for the company to leverage on during these challenging times and we expect our financial results for the year to be satisfactory, at best," managing director Jack Bowles said in a statement. "The impact of the current economic slowdown on consumer spending power is an additional challenge faced by the industry on top of the primary concern, which is the significantly higher levels of illegal cigarettes in Malaysia." For the six months to June 30, the group posted a slightly higher net profit of RM407.19mil against RM406.59mil before. "This was achieved through improved product mix driven by the strong performance of its brands, which recorded a higher market share of 54.7%, up 3.1% compared with the same period last year. At the same time, higher net pricing and savings from a variety of productivity and cost management initiatives added to the positive growth," BAT Malaysia said in the statement. For the six months to June 30, total revenue was lower at RM1.98bil against RM2.04bil previously. The sales volume registered a decline year-to-date compared with the previous corresponding period mainly due to impact from the economic slowdown as well as higher levels of illicit trade, the company said. Industry volumes, as measured by the Confederation of Malaysian Tobacco Manufacturers, declined 11% year-to-date compared with the same period last year, it added. Enditem