BAT Under Pressure

Source from:  The Herald 09/02/2010

BRITISH American Tobacco quasi-monopoly status in the local tobacco industry seems to be buckling under pressure from local competitors that have managed to bring their business to marginal levels. In the half year to June 30, 2010 BAT's performance remained fairly indifferent as the group achieved a mere US$367 000 earnings before interest and taxation on a net turnover of US$9.4 million. During the same period, the tobacco processing company's total operating expenses were at US$9 million. Costs composed of cost of goods sold for US$6 million, selling and marketing costs of US$1,2 million and administrative expenses of US$1,9 million. Finance costs incurred in the half-year period totalled US$200 000, which reduced the group comprehensive income for the half year to US$167 000. The group's balance sheet stood at US$22,8 million with and net asset value of US$6,3 million while they closed borrowed to the tune of US$5,9 million and they had cash and bank balances of US$1 million. Sales volumes for the half year were up 40 percent on the comparable half year period to 30 June 2010 at 518 million sticks while cut rag shipments were two percent lower than those of the comparable half year period. Improvements are expected in the second half. In their outlook for the year given in the full year results to December 31, 2009 BAT highlighted that they expect competitors to outclass them until their international links begin to benefit them through shared services and international standardisations. The group's total costs grew more than the growth in revenues as depicted in the bottom line earnings compared to the comparable half year period in 2009. Enditem