Friday 29 Mar 2024
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KUALA LUMPUR (Oct 24): British American Tobacco (Malaysia) Bhd (BAT Malaysia) posted a 17% drop in net profit for the third quarter ended Sept 30, 2016 (3QFY16) to RM212.62 million or 73 sen per share from RM256.1 million or 90 sen per share a year ago, on lower revenue.

Revenue was down 19.6% to RM932.19 million in 3QFY16 from RM1.16 billion in 3QFY15.

Despite weak quarterly results, the cigarette maker declared a third interim dividend of 55 sen per share amounting to RM157.04 million, payable on Nov 24.

For the nine-month period ended Sept 30, 2016 (9MFY16), its net profit was 39.6% lower at RM432.95 million or RM1.153 per share versus RM717.18 million or RM2.506 per share as the excise duty led price increase resulted in the overall volume reduction and escalating cost pressures.

Revenue for the period fell 17% to RM2.92 billion from RM3.52 billion a year ago.

BAT Malaysia told the stock exchange today that it recorded one-off restructuring expenses consisting of provision for redundancies (RM33 million), asset impairment (RM33 million), provision for obsolete raw materials (RM11 million) and project cost (RM9 million).

"As a result, for year-to-date period, we recorded a decline of 37.7% (RM364 million) and 38.2% (RM366 million) in profit from operations and profit before tax respectively," it added.

It explained that profit from operations declined 28.8% if the impact of one-off restructuring expenses is excluded.

Going forward, BAT Malaysia remains concerned with legal volumes continuing to be impacted by the current rampant illegal cigarette trade as a consequence of the unprecedented excise increase in November 2015 as well as consumer down trading within the legal market.

"The escalating illegal cigarette trade constitutes the most concerning challenge in 2016 for the legal tobacco industry after its sharp incidence increase from 36.9% in 2015 to 49.9%, as recorded in the month of May 2016," it added. This means almost one out of two packs of cigarettes sold is illegal, the group said.

Based on the year-to-date result, BAT Malaysia expects the full year 2016 profit from operations to be lower than the previous year's.

In a separate filing with Bursa Malaysia, BAT Malaysia has appointed Tan Sri Aseh Che Mat as its chairman effective Jan 1 next year. Aseh replaces Tan Sri Mohamad Salim Fateh Din, who will be stepping down from his post by the end of the year due to work commitment.

Salim is the group managing director of Malaysian Resources Corp Bhd (MRCB). He has been with BAT Malaysia since April 11, 2012.

Aseh is the chairman of MWE Holdings Bhd as well as independent non-executive director of Lion Diversified Holdings Bhd.

Shares in BAT Malaysia closed up 44 sen or 0.88% at RM50.24 today, for a market value of RM14.35 billion.

 

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