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Tobacco News
BAT announces 20% higher pre-tax profit for 2001
  By: Darshini M. Nathan
Source: The Star (my), 2002-02-22

BRITISH American Tobacco (Malaysia) Bhd (BAT) announced a near 20% growth in pre-tax profit for the financial year ended Dec 31 last year, despite the increase in  cigarette prices following 20% increases in both excise and import duties on tobacco products last year.

Profit before tax increased to RM840.3mil last year, from RM701.19mil in the previous year. This was achieved on the back of a higher turnover of RM3.01bil, compared with RM2.77bil a year ago.  After-tax profit came to RM607.7mil, up from RM505.96mil previously.

For the fourth quarter, the company turned in a pre-tax profit of RM203.9mil on the back of a turnover of RM723.72mil. The last corresponding period saw a pre-tax profit of RM125.12mil on the back  of a turnover of RM657.93mil.

Net profit increased to RM145.03mil, from RM91.19mil in the last comparable quarter.

BAT has recommended a final dividend of 104.4 sen per share.

Its managing director, Stuart Watterton, attributed the company's  performance to improved margins in 2000 and last year.

"There were lower costs arising from synergy benefits, and rationalisation expenses of RM50mil in 2000 that were not incurred last year.

"However, these were partially offset by lower volumes and additional leaf costs in 2001," he said in a statement.

BAT said its leading brand, Dunhill, remained dominant in the local cigarette market with volumes increasing marginally from 2000.

While its other brands like Kent, Benson & Hedges and Peter Stuyvesant performed satisfactorily, BAT said, the market share of its value-for-money brand, Perilly's, continued to be affected by the influx of contraband cigarettes and stronger competition.

According to several analysts contacted by Star Business, BAT's full-year results were within expectations.

"There were no real surprises, but what is encouraging is the attractive final dividend recommendation of 104.4 sen," a research head said.

An analyst with an asset management firm said BAT's net profit for the last financial year was only about 2% above analysts' projections of between RM590mil and RM600mil. "The results have come in marginally above expectations," he said.

On the threat of contraband cigarettes to the company's Perilly's brand, he said the value segment tended to experience more volatility because of the tendency for consumers in that segment to be less loyal to the brand.

"You often find smokers of value brands to be more prone to switching to another brand, compared with smokers of a premium brand," he said.

He added that contraband cigarettes would always exist in the market, even if the government were to call a halt to the rise in duties on tobacco products.

He said Dunhill, which is in the premier brand segment, had quite a firm hold over the local cigarette market with some 45% share.


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