BAT Reports Lower Net Profit

Source from:  The Star 04/21/2010

PETALING JAYA: British American Tobacco (M) Bhd (BAT) shareholders yesterday approved the company's total dividend for its financial year ended Dec 31, 2009 (FY09) of 236 sen per share, representing a payout of 90.2% of net profit attributable to shareholders. The amount was, however, lower than the total dividend payout of 265 sen per share in FY08. BAT has said it would maintain its 90% dividend payout policy. BAT reported net profit and revenue of RM746mil and RM3.92bil respectively for FY09, compared with net profit of RM811.7mil and revenue of RM4.13bil in FY08. On future dividend payouts, chairman Tan Sri Abu Talib Othman said BAT would try to return to shareholders "as much as it could" without impacting its growth. "In this industry, we have to keep investing in new products, new strategies (and) in our people to move forward and ensure growth," he said after the company AGM yesterday. Finance director Steve Rush said 2010 was also expected to be a challenging year, especially with the implementation of the Government's ban on cigarette packs of less than 20 sticks effective June 1. "The key strategy is to convince the pack of 14 smokers not to change brands and to give them extra features without additional costs. "We believe we can address this change in regulation. But it will be a challenging year until we see how our strategy pans out, which would probably not be until the third quarter (of this year)," he said. Rush reiterated a statement made by BAT late last year that the Government's new ruling would result in a reduction of RM80mil in operating profit in 2010. Asked if BAT would be launching new cigarette products to counter the new regulation, Rush said: "There may be some launches, I'm not saying there would be." Rush declined to forecast the company's earnings for its current financial year, adding that BAT would be announcing its first quarter results tomorrow. He also said even though BAT's market share had been declining almost annually for the last 10 years, its profit share of the industry had been increasing yearly. According to a previous report, BAT's volumes dropped by 13.8% last year, compounded by brand migration. Despite the decline in volumes, BAT's realigned strategic portfolio, led by its "global drive brands," had performed commendably, gaining 2.6 percentage points in market share to reach a 54.6% market share. "What we focus on are premium brands and we look at the quality of our portfolio. The global drive brands, Dunhill, Kent and Pall Mall, have grown share each year and that will remain the focus. "Obviously we would like to grow market share but we will not grow it if it is less profitable," said Rush. He also commended the local enforcement agencies for cracking down hard on the illicit cigarette trade in Malaysia. "The enforcement (on illicit trade) has been good and has been increasing year-on-year. This year, we hope to see the illicit volumes stabilise. "However, it is something difficult to control or take action against. We are working closely with stakeholders on awareness and research to address the issue," Rush said. Enditem