BAT Hit by Challenging Landscapes

Source from:  The Star 11/20/2009

British American Tobacco (M) Bhd (BAT) posted a lower net profit of RM166.7mil in its third quarter ended Sept 30, down 28.2% from the previous corresponding period, due to challenging operating landscapes, compounded by high levels of illicit trade and the economic crisis affecting consumers' spending power. In line with the slide in net profit, the company's revenue for the period under review also recorded a fall of 16.3% to RM919.1mil. Earnings per share for the quarter also decreased to 58.40 sen from 81.30 sen previously. The company has declared a second interim dividend of 61 sen per share, tax exempt under the single tier tax system, amounting to RM174.2mil (financial year ended Dec 31 2008: 76 sen per share, tax exempt under the single tier tax system amounting to RM217mil) payable on Dec 17. The weaker results, according to BAT in a statement, was due to the 6.1% contraction in legal volumes compared with the previous quarter as a result of continued pressure from high level of illicit cigarettes. According to the latest illicit cigarette survey conducted by the Confederation of Malaysian Tobacco Manufacturers for the period June to August, the level of illicit cigarettes had gained further ground, from 36.7% to a new record high of 38.7%. Managing director William Toh said in view of the current high level of illicit cigarettes, the latest increase of 1 sen per stick in excise on cigarettes, which took effect Oct 1, would hopefully assist the industry to mitigate some of the loss of legal volumes to the burgeoning illicit trade. "This approach, coupled with strong enforcement initiatives, implementation of stricter penalties and creating more awareness on the dangers of this menace, will help to bring down the current high level of illicit cigarettes," he said. "For the rest of the year, the group does not expect to maintain earnings in line with the previous year," he said. However, Toh said, it was committed to delivering long-term shareholder value "through our strategic imperatives on growth, productivity, responsibility and winning organisation." Arising from the financial performance of the quarter under review, the company has declared a second interim dividend of 61 sen per share, tax exempt under the single tier tax system in respect of the financial year ending Dec 31. Enditem