BATB earnings sparkle over the years

British American Tobacco Bangladesh (BATB) has made a record turnover of Tk 213.40 billion (21,340 crore) in the first six months of the calendar year (January-June 2023) by selling tobacco products.

 The company has also earned a net profit of Tk 9.50 billion (950 crore) (after deducting all expenses and taxes) during the period, setting another new record, according to the half-yearly financial report published by BATB on Monday.

 It suggests the sales of tobacco products have increased at a time when the country is facing enormous economic challenges especially inflationary pressure on people.

Both the turnover and the net profit made by the company in six months this year are the highest in the past 13 years, show the half-yearly reports from 2010 to 2023.

 The reports say BATB’s net profit steadily grew from Tk 2.87 billion (287 crore) in the first half of 2014 to Tk 9.14 billion (914 crore) in the first half of 2022, a period when Mr Shehzad Munim has served BATB as its Managing Director.

 According to the half-yearly report of 2010, the company's business in the first six months of that year was only Tk 33.76 billion (3,376 crore), and that year, the company's net profit was Tk 154 crore. In the past 13 years, the earning and profit of this multinational company have grown more than six times.

 The company's earnings per share, or EPS, stood at Tk 17.59 in six months from January to June last year, compared to Tk 16.93, from the same period last year.

The money a company receives from sales and other proceeds during a certain period is considered the company's total revenue. Net profit is what is left after deduction of all expenses and taxes.

 The government imposes higher taxes, value added tax (VAT) and other duties on cigarette companies. The government has been increasing taxes and VAT on companies that are manufacturing and distributing cigarettes and other tobacco products regularly to discourage the use of cigarettes and other tobacco products. In such a context, the price of cigarettes has increased over the years especially after submission of annual budgets.

However, a review of the financial report of BATB shows that the consumption of cigarettes cannot be reduced only by increasing the duties, taxes, and VAT. In contrast, as the price increases, so does the sales of cigarettes, contributing to higher revenue and profit for cigarette companies.

Companies that produce tobacco products are paying the highest tax in the country. The tax rate is 45 per cent, with an additional 2.5 per cent surcharge. There are other duties and VAT, too. However, cigarette sales are not decreasing despite increase in the tax every year.

According to the latest BATB report, the company sold 39.11 billion (3,911 crore) cigarette sticks in the first six months of this year. The company sold 35.39 billion (3,539 crore) cigarette sticks during the same period last year. As such, the company's sales of cigarettes have increased by 3.72 billion (372 crore) pieces during the six-month period in a year.

Despite the news of record earnings and profit, the company's shares were stuck at the floor price or the lowest price level on Monday. The market price of the company's shares has been stuck at the floor price of Tk 5.19 billion (518.70) since September 6 last year.

Listed on the stock market, BATB sells various brands of cigarettes, including Benson, Gold Leaf, Derby, Hollywood, Star, Capstan, and Pilot.