Thursday, July 21, 2011

BAT 2Q net profit slips 0.9% to RM184.14m, declares 90c dividend

KUALA LUMPUR: British American Tobacco (Malaysia) Bhd net profit for the second quarter ended June 30, 2011 slipped 0.9% to RM184.14 million from RM185.84 million a year earlier, impacted by lower volumes and loss of 14's pack size margin, partially offset by higher net pricing and productivity savings.

BAT said on Thursday, July 21 that its revenue for the quarter rose to RM1.04 billion from RM993.87 million in 2010. Earnings per share was 64.50 sen, while net assets per share was RM1.76.

BAT declared a second interim dividend of 60 sen per share totaling RM171.32 million and a special interim dividend of 30 sen per share amounting to RM85.66 million, both tax exempt under the single-tier tax system,in respect of the financial year ending Dec 31, 2011.

For the six months ended June 30, BAT's net profit fell 3.9% year-on-year to RM362.69 million from RM377.74 million on the back of revenue RM2.04 billion.

Reviewing its performance, BAT said the comparative period last year saw higher marketing expenditure incurred during the introduction of Dunhill Reloc and trade activities to migrate the 14's to 20's pack size.

Combined with the reduction in overhead spend in 2011 of 10.4% versus same period last year, this limits the net decline in profit before / after tax to only 4% versus same period last year, it said.

On its prospects, BAT said its volume year to date declined 4.4% versus same period last year, following the hefty excise increase in October 2010.

It said the second quarter volumes had improved versus the previous quarter in response to increased enforcement of illegal pricing activities by certain sub-value for money brands.

With regards to the loss of margin from the ban on packs less than 20 sticks, BAT said the annualised financial impact remained at its previously reported estimate of RM80 million per annum, adding that Q2 was the last quarter where the loss of margin from the ban distorted the financial comparative.

BAT said its profit outlook for 2011 remains cautious although improved in comparison to the outlook in Q1.

'Key concerns are the prevailing high incidence of illicit cigarette trade and directly impacting this high rate of illicit trade is the Government's future excise increases and continued illegal pricing activities by certain sub-value for money brands.

'However, BAT remains committed to maintaining and enhancing its leadership position in the tobacco industry through the strength of its brand portfolio and in delivering long term shareholder value,' it said.

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