British American Tobacco Bangladesh Company (BATBC) experienced a 9.41% year-on-year decline in profit for the first quarter ending March 2024, primarily due to lower revenue despite notable efficiency in management.

BATB’s efficiency in management is evident in the significant reduction of operating expenses and cost of goods sold. The cost of goods sold was reduced by 8.39%, and operating expenses were slashed by 42% compared to the same quarter of the previous year. 

Despite these cost reductions, the company’s quarterly revenue decreased 4% year over year, which significantly impacted its earnings.

High inflation has started to affect the demand for tobacco products, which are traditionally considered to be highly resistant to economic fluctuations. 

The company reported a 10% decline in cigarette stick sales in the first quarter of this year compared to last year. Additionally, BATB experienced an 81% year-on-year drop in leaf export volumes, totaling Tk 181 million in the first quarter.

In a stock exchange filing on Tuesday, BATB attributed the earnings decline to volume de-growth and lower leaf export. The company’s operating cash flow also suffered a steep fall in the first quarter of 2024 compared to the same quarter of the previous year. 

The company reported a net operating cash flow per share (NOCFPS) of Tk 10.49 in the negative for January-March 2024, down from Tk 2.09 in the negative for the same period last year.

Despite these challenges, the company had earlier recommended a 100% cash dividend for 2023 following marginal profit growth. 

In 2023, BATB’s revenue increased 12% year over year to Tk 403.79 billion. However, increased operating expenses, cost of goods sold, and income tax led to a minimal year-over-year profit growth of just 0.06%.

Following the regulatory decision to withdraw the floor price imposed on BATBC’s stock on March 4, the stock price fell 31.63% to Tk 364.5 per share on the Dhaka Stock Exchange (DSE) by April 25. The stock closed at Tk 363.30 per share on Tuesday, reflecting a loss of 2.57% from the previous day.