Highlight BAT 2Q net profit down 13.2%, pays 78 sen dividend

by **Cals** Tue 28 Jul 2015, 23:04

Highlight
BAT 2Q net profit down 13.2%, pays 78 sen dividend

KUALA LUMPUR (July 28): British American Tobacco (Malaysia) Bhd (BAT) ([You must be registered and logged in to see this image.] Financial Dashboard) saw its net profit for the second quarter ended June 30, 2015 (2QFY15) fall 13.2% to RM215.29 million or 75 sen a share from RM248.09 million or 87 sen a share a year ago due to lower sales volume.
Revenue for the quarter declined by 12.2% to RM1.09 billion from RM1.23 billion in 2QFY14.
The group declared a second interim dividend of 78 sen per share, amounting to RM222.71 million for the financial year ending Dec 31, 2015, payable on Aug 27, 2015.
This brings the group's year-to-date dividend to 156 sen per share.
For the six months period (6MFY15), BAT's (fundamental: 1.55; valuation: 1.7) net profit fell 3.1% to RM458.64 million or 161 sen a share from RM473.49 million or 166 sen a share a year ago, while revenue declined marginally by 0.8% to RM2.36 billion from RM2.38 billion in 6MFY14.
In a filing with Bursa Malaysia today, BAT said its total market share for 6MFY15 rose 0.5% to 61.7% with the growth mainly coming from the aspirational premium brands, namely Peter Stuyvesant.
"Dunhill continued to maintain its clear leadership in the market with 46.7% share during 6MFY15, recording a marginal decline of 0.3% versus full year 2014," it said.
However, BAT said Dunhill's performance in 2QFY15 was still encouraging as the brand showed an increase of 0.7% versus the preceding quarter.
Within the aspirational premium segment, the group continued its strong performance mainly driven by Peter Stuyvesant.
As at June 30, 2015, its aspirational premium share of market stood at 9.8%, which translated into a market share increase of 1% versus full year 2014.
BAT noted that during 6MFY15, the legal market experienced a volume contraction of 9.6% versus the same period last year, largely attributed to a weak 2QFY15 which declined by 17.8% from the year-ago period.
The group attributed the contraction in 2QFY15 to volume correction in the second quarter after an abnormal first quarter demand by customers ahead of the goods and services tax implementation in April this year, and soften demand among consumers due to weaker sentiments after the GST implementation.
BAT also saw its contract manufacturing volume for 6MFY15 decline by 14.5% year-on-year due to the reduction of volumes sold to the Australian and South Korean markets.
"Despite the overall decline in the domestic and contract manufacturing volumes, total revenue for 6MFY15 decline at a lower rate of 0.8% (RM18 million) compared with the same period in 2014," it said.
The group attributed this to the impact of the November 2014 exercise led price increase on the domestic business, which partially mitigated the impact of the volume decline and the group's absorption of the GST.
Going forward, BAT said it is still unable to ascertain the impact of the GST towards its performance in the short to medium term.
It acknowledged that the industry has been affected by the pressure on comsumers' disposal income during 2QFY15.
It stressed that illegal cigarette trade in the country remained a key challenge this year.
"Legal volumes continue to suffer from the impact of the illegal cigarette trade as a consequence of the steep excise increases in September 2013 and November 2014.
"However, the group continues to be encouraged by the relentless enforcement efforts taken by various enforcement agencies and in particularly, the Royal Malaysian Customs to address the illegal cigarettes trade," it added.
The group said the outlook for the rest of the year will depend on the recovery of the legal market.
BAT shares closed 12 sen or 0.18% lower at RM65.60 today, for a market capitalisation of RM18.76 billion.
(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)