BAT Expects to Double Exports This Year

Source from:  Business Times 04/20/2011

PETALING JAYA: Cigarette-maker British American Tobacco (Malaysia) Bhd (BAT) (4162)expects to double exports this year, a move that will give it a small revenue boost amid tougher sales at home. It may also sell some machinery it no longer needs, valued at between RM18 million and RM20 million, to its BAT counterparts in other markets. Managing director William Toh said the firm had taken on two new foreign markets this year. "We'll be supplying cigarettes to Japan and the Australasia area," he told reporters after BAT's annual general meeting yesterday. This could help increase its export contribution to revenue to between 5 per cent and 6 per cent, compared with between 3 per cent and 5 per cent last year. "That's not a significant amount of revenue, (but) it will create greater efficiencies in the factory and absorb fixed costs that we've been incurring," outgoing finance director Steve Rush said. Meanwhile, its new finance director Andreas Thompson was introduced to shareholders yesterday. BAT, which has the lion's share of the legal market, managed to gain a marginal 0.4 percentage point market share growth last year to 60 per cent. However, it faces an uphill challenge trying to increase sales volume after a tax hike last October prompted more customers to switch to cheaper cigarettes, fuelling illicit cigarette sales further. There was also a tightening of the tobacco regulatory environment, with a ban on cigarette packs with less than 20 sticks and the introduction of minimum pricing. The illicit market accounted for an all-time high of 38.2 per cent of the entire cigarette market last year. This led to the legal market's sales volume falling by 1 per cent last year, with BAT's alone falling by 2 per cent. Its net profit fell by 2 per cent to RM731 million. This year, "it will be a lot more challenging", Toh said, when asked if he expected volumes to fall further. On dividends this year, Toh said the firm would continue its policy of paying out at least 90 per cent of its net profit. Enditem