vested
MD of BAT retiresBy GANESHWARAN KANA
PETALING JAYA: The managing director of Malaysia’s largest tobacco company has retired just as the firm reported its worst net profit since its merger two decades ago.
BRITISH AMERICAN TOBACCO (M) BHD (BAT), which witnessed declining profitability for the fourth consecutive year, announced yesterday that its managing director Erik Stoel has opted for early retirement.
The 51-year old Stoel, who is a Dutch, has helmed BAT since June 2016. He will leave office on March 31 following a one-month transition period prior to handing over to his successor, Jonathan Reed.
For the fourth quarter of financial year 2019 (4Q19), BAT reported a net profit decline of 18.27% year-on-year (y-o-y) to RM93.86mil. The company’s revenue in the October to December 2019 period also fell by 14.03% y-o-y to RM662.45mil.
The board of directors announced a dividend of 33 sen for the final quarter. Earnings per share were 34.2 sen.
Cumulatively, for the financial year of 2019 (FY19) ended Dec 31, BAT’s net profit tumbled by nearly 27% y-o-y to RM343.81mil – the lowest since 1999. Meanwhile, revenue was down by 11.14% y-o-y to RM2.51bil.
BAT blamed its poor financial performance on the illegal cigarette trade in Malaysia, which it said has reached record highs.
The company, which controls
53.7% of the country’s legal cigarette market, also attributed the decline in earnings to market downtrading as well as the absence of one-off factors reported in the same period last year such as GST removal one-off benefit and tax stamps refunds.
BAT’s full-year dividend was RM1.18 per share, which is the lowest since FY14.
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Total legal industry volume declined by 10% compared to the same period last year largely attributed to rapid growth of
illegal vaping products and continued high level of
illegal cigarette incidence at 63%.Despite increased enforcement actions from enforcement agencies, the result was insufficient to translate to legal cigarette volumes recovery.
“The group continued the cost reduction exercise further, rationalising its cost base significantly, leading to lower operating expenses of 12.7% (RM36mil) versus the same period last year.
“Given the pressure in the tobacco landscape, the group had started its internal reorganisation with the aim to aggressively optimise the cost base and set a new foundation for sustainable cost structure in the future.
“With this, a provision for redundancies of RM15mil was incurred in the last quarter of 2019, ” BAT said in a Bursa Malaysia filing.
It also noted that its restructuring exercise will continue into the first half of 2020 and will ultimately reduce 20% of the workforce
BAT was formed from the merger of Rothmans of Pall Mall (M) Bhd and Malaysian Tobacco Company Bhd on Nov 3,1999. Among BAT’s known cigarette brands are
Dunhill, Pall Mall and Kent.Over the past several years, the tobacco manufacturer’s share price has taken a major hit as investors’ interest waned due to weakening business prospects.
As a result, BAT’s market capitalisation has plunged by over RM17bil from its all-time-high of
RM20.95bil on Sept 12,2014 to just RM3.63bil yesterday.
Over the past 12 months, the share price has fallen by 63% to RM12.70 yesterday.
Stoel, however, said that BAT’s current share price did not reflect the organisation’s strength and fundamentals.
“Unfortunately, as a corporate entity we cannot go at it alone to resolve the illegal cigarettes trade issue. The government must be held accountable and radical actions such as demand driven solutions that include a review of excise duties must be explored.
“You need to allow legal players the bandwidth to introduce illicit fighters, otherwise we foresee that the entire legal industry will soon give way to illegal cigarette syndicates who do not abide by any laws nor pay taxes, ” he said in a separate statement.
Source: The Star
https://www.thestar.com.my/business/bus ... at-retires
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