BAT's profit continues to be impacted by Nov 2015 excise hike
KUALA LUMPUR: British American Tobacco (M) Bhd (BAT) posted a profit attributable to shareholders of RM212.63mil for the third quarter ended Sept 30, down 17% from a year earlier.
Revenue meanwhile dipped 20% to RM932.9mil. the cigarette manufacturer and retailer told Bursa Malaysia.
For the nine-month period, its profit fell 40% to RM432.95mil due in part to the RM86mil provision for restructuring expenses made in the second quarter in relation to the winding down of its factory operations.
BAT also noted that as of September 2016 year to date, total legal domestic market experienced a volume contraction of 28.6% versus the same period of last year, mainly driven by the steep excise increase in November last year.
“However, slower rate of decline was seen within the legal industry in recent months. As a result of this market evolution, during the same period, the group’s domestic and duty-free volumes declined 30% when compared to the same period of last year,” BAT said.
Its contract manufacturing business sank by 41.9% versus the same period of last year (cigarettes and non-cigarettes). This was largely driven by lower volumes across all markets i.e. Australia, South Korea, the Philippines, Singapore, South Korea, Japan and Taiwan markets,” it said.
As of August year to date, the group registered 58.1% share in the total legal market, a drop of 2.8% versus full year 2015. This decline was mainly attributed to the down trading dynamics in the market after the excise driven price increase in November 2015.
On individual brands, BAT said Dunhill’s market share fell 2.8 percentage points (ppt) to 43.3% in Jan-August 2016 compared with full year 2015.
In contrast, Peter Stuyvesant recorded a 6.3% share of market, up 0.7 ppt against full year 2015.
Pall Mall, meanwhile, recorded a marginal decline of 0.2 ppt versus 2015, closing at 4.3% for year to date August 2016.
On its prospects for the year, BAT said it remained concerned with legal volumes continuing to be impacted by the current rampant illegal cigarette trade as a result of the steep excise increase in November 2015, as well as consumer down trading within the legal market.
BAT announced a third interim dividend of 55 sen compared with 78 sen last year.