Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


BAT NZ annual profit biggest since at least 1999

British American Tobacco NZ posts biggest annual profit in at least 14 years

By Suze Metherell

June 6 (BusinessDesk) - British American Tobacco Holdings (New Zealand), the nation's largest cigarette company, reported its biggest annual profit since at least 1999, after earnings rose 15 percent as it cut costs while increased excise tax hiked prices.

The local arm of British American Tobacco, whose brands include Pall Mall, Benson & Hedges and Dunhill, lifted profit to $132 million in calendar 2013 from $115 million a year earlier, according to financial statements lodged with the Companies Office. That's the biggest annual profit the New Zealand unit has reported according to financial statements dating back to 1999. BAT NZ paid and declared dividends of $122 million in 2013, down from $139.2 million in 2012. BAT NZ declined to confirm whether the profit was a record.

The company's revenue, which includes excise duties, rose 3.6 percent to $1.21 billion, while administrative and other overheads and selling, distribution and marketing costs shrank 17 percent to $60.8 million. The cost of sales, which includes excise tax, rose 3.6 percent to $963.5 million. BAT NZ spent $46.7 million buying finished goods from related parties in the year, while its inventories shrank to $329.1 million as at Dec. 31 from $344.8 million a year earlier.

New Zealand "market share was higher, however, volume was impacted by the industry contraction. Profit grew strongly due to price increases and cost savings," the London-based parent said in its 2013 annual report. The parent reported a 2.7 percent decline in volume to 676 billion cigarettes in the year ended Dec. 31, while global sales were flat at 15.3 billion pounds. BAT group profit rose 3 percent to 5.55 billion pounds in 2013. Its Asia-Pacific unit made up 27 percent of revenue with 4.2 billion pounds in sales, delivering a profit of 1.7 billion pounds.

BAT dominates the local market, with its nearest rival, Imperial Tobacco, reporting sales of $432 million in the year ended Sept. 30, 2013 and third-ranked Phillip Morris posting sales of $83 million in calendar 2013.

The New Zealand government has been increasing the tobacco excise by 10 percent each year since 2012, lifting the price consumers must pay as part of a policy to make New Zealand smoke-free by 2025. The increases are expected to lift the average price of a pack of 20 cigarettes to more than $20 by 2016.

"Tobacco consumption in New Zealand has been declining for many years, principally in response to gradual excise increases," Dawn O'Connor, BAT NZ spokeswoman told BusinessDesk. "There have been significant excise increases imposed since 2010 and we think that existing measures should be given time to have an impact before new measures are considered."

New Zealand is looking to follow Australia in introducing plain packaging in a bid to reduce brand recognition and shrink the cigarette market. Australia has introduced non-identifiable tobacco products but is being sued by tobacco producers at the World Trade Organisation which say the new regulations are intellectual property infringement.

Tobacco companies have been vigorously opposed to the plain packaging movement, questioning the legality and effectiveness of removing the last mode of advertisement for their brands and arguing it has led to an increase in black market tobacco.

Last month, New Zealand's government cut duty free allowances on tobacco to 50 cigarettes per person, from 200 cigarettes. Duty free sales make up 2 percent of the local British American Tobacco sales, O'Connor said.

As more governments clamp down on smoking and the market reaches maturity, tobacco companies are looking for alternative, such as the e-cigarette. Nicotine e-cigarettes are illegal in New Zealand, something which the company is lobbying the government to change.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Housing: Affordability Drops 14%, Driven By Auckland Prices

Housing affordability across New Zealand fell 14 percent in the year ending November 2014, with Auckland’s lack of affordability set to reach levels it hit during the height of the global financial crisis, according to the latest Massey University Home Affordability Report More>>

ALSO:

The Dry: Fonterra Drops Forecast Milk Volumes By 3.3 Percent

Fonterra Cooperative Group, the worlds largest dairy exporter, reduced its milk volume forecast for the 2014-2015 season by 3.3 per cent due to the impact of dry weather on production in recent weeks. More>>

ALSO:

Strike: Lyttelton Port Workers Vote To Escalate Dispute

Members of the Rail and Maritime Transport Union (RMTU) at Lyttelton Port today voted to escalate their industrial action. Around 200 RMTU members have been operating an overtime ban since 17 December and today they endorsed a series of full withdrawals of labour at the port. More>>

ALSO:

Scoop Business: NZ Dollar Falls To 3-Year Low As Investors Favour Greenback

The New Zealand dollar fell to its lowest in more than three years as investors sold euro and bought US dollars, weakening other currencies against the greenback. More>>

ALSO:

Scoop Business: NZ Govt Operating Deficit Smaller Than Expected

The New Zealand’s government’s operating deficit was smaller than expected in the first five months of the financial year as a clampdown on expenditure managed to offset a shortfall in the tax-take from last month’s forecast. More>>

ALSO:

0.8 Percent Annually:
NZ Inflation Falls Below RBNZ's Target

New Zealand's annual pace of inflation slowed to below the Reserve Bank's target band in the final three months of the year, giving governor Graeme Wheeler more room to keep the benchmark interest rate lower for longer.More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news