KUALA LUMPUR: British American Tobacco (Malaysia) Bhd (BAT) posted a net profit of RM185.5 million for the fourth quarter ended December (4QFY14), down a marginal 2% from RM189.9 million a year ago, due to higher cost of sales, operating expenses, and tax expenses.

Revenue for the quarter, however, increased 10% year-on-year (y-o-y) to RM1.21 billion from RM1.09 billion.The group also declared a fourth interim dividend of 78 sen per share for FY14 amounting to RM222.71 million, payable on March 26 this year.

For the full year (FY14), BAT’s (fundamental: 1.35; valuation: 1.3) net profit rose 9% to RM898.1 million, from RM825.8 million in FY13, while revenue climbed 6% to RM4.80 billion from RM4.52 billion.

The group said its market share for the year fell 0.7 percentage points y-o-y to 61.2%, due to down trading in the market and weaker performance from its Pall Mall and non-supported brands. Its premium portfolio was also pressured further due to the excise-led price increase in November, which saw BAT raising its prices by RM1.50 per pack for its premium cigarettes.

Besides the lower market share, BAT also highlighted that its operating expenses rose 20.9% y-o-y in FY14, due to an increase in investment on brand activation programmes and trade retail contracts.Looking ahead, BAT remains cautiously optimistic on its prospects for 2015, amid the implementation of the goods and services tax in April and the declining market share of illegal cigarettes. 

This article first appeared in The Edge Financial Daily, on February 17, 2015.