Steady first-half results for BAT


  • Business
  • Tuesday, 29 Jul 2003

By ANGIE NG

BRITISH AMERICAN TOBACCO (M) BHD (BAT) has continued to perform to analysts' expectations by reporting an all-round improvement in its half-year results. 

For the six months ended June 30, BAT's group pre-tax profit rose 14% to RM528.1mil from RM464mil in the same period 2002 on a marginal increase in revenue to RM1.55bil from RM1.53bil previously. 

Russell Cameron

For the second quarter, group pre-tax profit came in at RM268.9mil, up from RM259.1mil in the preceding quarter. 

Its turnover for the quarter rose to RM787.5mil from RM766.6mil. 

The board has declared an interim dividend of 108 sen net per share, payable on Sept 24 – an increase of 12% on the 2002 interim dividend. 

BAT said in a statement to the KLSE yesterday that its improved profit performance was the result of operational efficiencies, lower brand spending, a gain from the disposal of equity in TIEN WAH PRESS HOLDINGS BHD, and higher domestic volumes, offset by lower contract manufacturing and duty-free volumes. 

BAT managing director Russell Cameron said: “Volumes have yet to recover to the pre-economic crisis levels but the improved domestic volumes are attributable to a number of factors including the company’s slightly higher market share, a gradual improvement in the economy and price stability.” 

He said that enforcement efforts of the authorities had also resulted in some switching from illegal cigarettes to duty-paid ones. 

The company’s leading brand, Dunhill, has continued to grow steadily, with both volume and market share increasing marginally from the last quarter. 

Cameron said that Pall Mall had also continued to show encouraging volume and share growth while the other supporting brands Kent, Benson & Hedges and Peter Stuyvesant had performed satisfactorily. 

“We fully support the government’s plan to combat illegal cigarettes through continued enforcement and other measures, such as the security ink markings for domestic cigarettes and banderoles on imported cigarettes to indicate tax payment,” he added. 

The company said the gradual improvement in the economy and price stability had had a positive impact on industry volumes to date, adding that a favourable economy and continued focus on reducing illegal cigarettes would help ensure the trend continued for the rest of 2003. 

An analyst with Mayban Securities said BAT had managed to grow the market share of its anchor brand Dunhill to 46.6% from 46.1% previously and that of Pall Mall to 3.4% from 2.7%. 

She said the improvement in market share was achieved despite only marginal growth in tobacco consumption of between 1% and 2% in the local market. 

“Overall, the company is on track with its projections and has performed quite well.  

“The process improvement at the plant has also helped substantially,” she added. 

Barring unforeseen circumstances, the analyst said the overall outlook for BAT for the current financial year was expected to be satisfactory. 

Stockcheck on BAT

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