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British American Tobacco Records Flattish Earnings In 9M15
British American Tobacco (Malaysia) (BAT) posted a 6.5 percent increase in 3Q15 net profit to RM256.9 million, largely on lower operating expenses, lower finance cost and lower cost of sales. In contrast, quarterly turnover slipped 4 percent to RM1,161.7 million, due to declining volumes sold to the Australian market.
For the nine-month period though, earnings was flat at RM715.5 million, while revenue inched down 1.9 percent to RM3,523.6 million. Higher operating expenses due to timing of brand and trade marketing as well as business restructuring mainly on the production area, were the main drag on bottom line.
As of September 2015, total domestic industry volumes declined 10.9 percent largely driven by the softer demand due to weaker market sentiments post goods and services tax implementation. However, the group performed slightly better than the industry, registering a volume decline of 10 percent.
Significance: For 3Q15, BAT has declared a dividend of RM0.78 per share, unchanged from 3Q14. Looking ahead, the firm noted of headwinds in the industry, as it expects legal cigarettes volumes to suffer after the steep increases of excise in the last two years and the pressure on consumers’ disposable income.
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