BAT cuts dividend payout on lower earnings

Net profit down 21% to RM113.72mil for quarter ended June 30

PETALING JAYA: British American Tobacco (M) Bhd (BAT) has cut its dividend payout after earnings fell by more than a fifth on lower sales.

The maker of Dunhill cigarettes saw its net profit fall 21% to RM113.72mil for the second quarter ended June 30 from RM144.08mil in the corresponding quarter last year.

Consequently, its earnings per share (EPS) fell to 38.6 sen from 51.6 sen.

BAT has declared a dividend payout of 35 sen a share for the quarter compared with the 43 sen a share paid in the same corresponding period last year.

BAT’s shares fell two sen to close at RM33.68 yesterday.

During the quarter in review, the group’s revenue fell 9.2% to RM679.15mil from RM748.31mil previously.

For the cumulative period, BAT’s net profit came in at RM209.61mil, down 19% from RM258.31mil in the six months ended June 2017.

This resulted in a lower EPS of 72.3 sen, compared with 93.2 sen previously.

In the first half of the year, the group’s revenue fell 12% to RM1.32bil from RM1.50bil in the previous corresponding period.

In a statement, BAT attributed its lower revenue and earnings mainly to market contraction, absence of the sale of residual leaf raw materials to related companies outside of Malaysia and the portfolio mix impact as a result of Rothmans launch in the value-for-money segment.

BAT said it remained concerned with legal volumes continuing to be impacted by the current high incidence of illegal cigarette trade.

“Total legal industry volume for June 2018 year to date declined by 3.5% when compared to the same period of last year, driven by illegal cigarette growth of four percentage points to 63%,” BAT said.

“The group’s domestic and duty-free vol- umes in the first half of 2018 declined by 6.7% versus the same period of last year, higher than the industry average rate of decline due to the group’s premium portfolio and geographical coverage,” it added.

The outlook for the second half of 2018, BAT said, would be very much dependant on the recovery of the legal market.

In spite of the continuous pressure from the illegal cigarette trade, the group registered a volume growth of 4.8% during the second quarter of this year versus the preceding quarter, outperforming the total legal market, which grew by 2.2%.

After two consecutive quarters of share growth, BAT registered a market share of 57.2% in the second quarter of 2018, which was 1.3 percentage points above the year to date of the same period of last year.

Its leading brand Dunhill registered a market share of 39.7% for the second quarter of 2018, up 0.2 percentage points versus the year to date of the same period last year.