Flat earnings for BAT

PETALING JAYA: British American Tobacco (M) Bhd (BAT), which reported a flattish net profit of RM172.8mil, or earnings per share of 60.50 sen in the fourth quarter ended Dec 31, 2009, continues to see a challenging operating environment this year.

Fourth-quarter revenue climbed 1.8% to RM1.02bil from RM1bil posted in the corresponding period last year.

BAT has recommended a net final dividend of 62 sen per share for the 2009 financial year, bringing the total net dividend to RM2.36 per share, it told the stock exchange.

For the full year, BAT’s net profit fell 8% to RM746.8mil on the back of RM3.92bil revenue. It posted a net profit of RM811.7mil on revenue of RM4.13bil a year earlier.

An analyst said BAT’s full-year results met his expectations.

“The results were in line with my expectations. But the net profit is a bit below market expectations,” he said.

BAT said the decline in the full-year revenue was a result of the significant drop in volumes impacted by the increasing levels of illicit trade and contraction of the economy, but partially offset by higher net pricing and improved sales mix.

“Consequently, the group’s operating profit dropped by 6.9% to RM1.03bil from RM1.1bil, further impacted by higher cost of sales from under-utilisation of production capacity,” said BAT.

However, this was offset by savings from the implementation of a variety of productivity and cost management initiatives.

It added that the net profit declined by 8% as the lower statutory tax rate in 2009 was offset mainly by the non-deductibility of interest expense resulting in a higher effective tax rate in 2009.

BAT Malaysia’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.

BAT said the main contributors to the strong performance of the global drive brands were Dunhill and Kent, which had both gained 1.9 percentage points and 1.4 percentage points respectively in market share compared with a year earlier.

  BAT :  [Stock Watch]  [News]

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