BAT ... March 2009

BRITISH AMERICAN TOBACCO (M) recorded a Net Profit rise of 10% y-o-y for FYE Dec 31, 2008 to RM811.7m. Revenue for the year increased 8% to RM4.1 bil from RM3.8 bil in 2007 in the Company's filing on Feb 18, 2009.

BAT said that the improvement was due to higher pricing and better sales mix, which managed to offset the lower sales volume from the domestic market.

4QE DEC 2008 RESULTS
For 4QE Dec 2008, BAT's Revenue and Net Profit came in lower with a Net Profit of RM172.9m compared to RM232.2m in 3QFY08.

TOTAL INDUSTRY VOLUME DECLINES
In tandem with the decline in total industry volume (TIV), BAT saw its volumes shrink by 1.5% versus the same period in 2007. Analysts said this was the result of the current economic slowdown and the Government's hefty excise duty hike of 20% announced in Aug 2008.

Analysts expect tobacco players to face a tough 2009 due to tighter government regulations, intense competition as well as the ever-present threat of an increase in sin taxes. Among the new regulations to be introduced this in 2009 include pictorial warnings on all cigarette packs effective Jun 2009 as well as the imposition of a floor price.

CONSUMER SPENDING POSES A CHALLENGE
BAT's MD - JACK BOWLES said, " .... The impact of the economic crisis on consumer spending power adds to the mounting challenges faced by the industry. As a result there is no room for complacency ....".

ILLEGAL CIGARETTES
BOWLES mentioned the difficulties brought about by the ongoing high level of illegal cigarettes in Malaysia, which was spurred by the high and occasionally sporadic tax increases over the past four years.

" .... The sporadic tax increases had lead to greater price differentials between legal and illegal cigarettes. Mindful of this, the Company hopes that the Government will consider tax increases that are moderate and gradual ...." said BOWLES.

Analysts say that illegal cigarettes now account for close to 25% of total industry volume.

DIVIDEND
BAT's BOD are recommending a Final Net Dividend of 76 sen per share, which will go ex on Apr 22, 2009. This brings the Total Net Dividend for FY08 to 265 sen per share.