BAT 1Q profit rises to RM225.4m, declares 75 sen/share dividend

by **Cals** Fri 25 Apr 2014, 02:14

Business & Markets 2014

Written by Jeffrey Tan of theedgemalaysia.com

Thursday, 24 April 2014 18:14

KUALA LUMPUR (Apr 24); British American Tobacco (Malaysia) Bhd’s (BAT) net profit rose 10.4% year-on-year (y-o-y) to RM225.4 million in the first quarter ended Mar 31, 2014, from RM204.2 million.

Revenue rose 5% y-o-y to RM1.15 billion from RM1.09 billion.

BAT declared a first interim dividend of 75 sen per share under the single-tier tax system for the financial year ending Dec 31, 2014.

In a statement to Bursa Malaysia, the cigarette manufacturer said the higher net profit was due to a higher gross profit attained.

However, BAT said its operating expenses rose 34% or RM26 million higher as compared to the corresponding quarter a year earlier. It said this is due to the timing of activities in the first quarter last year, when operating expenses were unusually low.

Whilst revenue recorded was higher, BAT said the legal cigarette industry volumes have plunged following the significant excise-led price increase in September last year.

The firm said it was no surprise that the company’s domestic volume declined 7.9% compared to the same quarter a year ago.

It added contract manufacturing volume fell 23% y-o-y, largely due to the partial reallocation of volumes from Japan to another manufacturing facility.

“We are highly concerned about the overall shrinkage of the legal market, but we are encouraged by the Royal Malaysia Customs’ response in addressing illegal cigarettes trade through their enforcement activities,” said BAT on prospects ahead.

“For this year, our performance will be heavily contingent on the effectiveness and sustainability of enforcement activities against the illegal cigarettes trade,” it said.