BAT PJ
KUALA LUMPUR: British American Tobacco (M) Bhd
(BAT), posting disappointing results for the first half year ended June 30, 2016, blamed shrinking sales volume following steep excise increase of about 40% last November as well as escalating cost pressures arising from it.
The company, whose main brands include Dunhill and Peter Stuyvesant, reported on Tuesday that its 2016 first-half earnings were halved to RM220.33mil against RM461.09mil in the same period last year.
Revenue for the six months ended June 30, 2016, slid 16% to RM1.98bil.
BAT said the group’s domestic and duty-free volumes fell 28.9% versus the first half of 2015. This was amid a 26.3% volume contraction in the country’s total legal domestic market following the excise hike, which in turn boosted illegal cigarette trade.
Contract manufacturing business, meanwhile, continued to experience weak volume performance, recording a drop of 39.0% (cigarettes and non-cigarettes) versus the same period of last year.
It attributed this largely to lower demand from the Australian, Philippines, Singapore and Taiwan markets.
“As of May 2016 year to date, the group registered 58.5% share of legal market, translating into a decline of 2.5 percentage points versus full year 2015. This decline is mainly attributed to down trading dynamics in the market after the excise-driven price increase in November 2015,” BAT said.
In addition, the group made a provision for restructuring expenses of RM86mil in the second quarter of 2016, in relation to the winding down of its factory operations.
Based on the results of the first half of 2016, BAT said it expected the full-year 2016 profit from operations to be lower than the previous year.
BAT’s board of directors declared a second interim dividend of 45 sen per share (78 sen last year).
BAT shares gained 28 sen to close at RM56.00 on Tuesday with 114,100 shares traded.
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