British American Tobacco scales back NZ business 17 Jun 2016
Related articles
- NZ consumers grow more upbeat, may resume spending Business
- Knowles quits as CEO of KiwiBank Business
- NZ migration bolstered by British invasion Migration
- NZ manufacturing activity reaches highest since 04 Business
- NZ dollar hits 22-month high vs euro Business
- OceanaGold finds new gold deposits at Fraser mine Business
- Transpower gets go-ahead for $170m SI upgrade Business
- NZ home sales creep up in March, still subdued Property
- NZ economy expands at fastest pace in two years Business
- New Zealand food prices fall in February Business
Friday 17 June 2016 12:30 PM
British American Tobacco scales back NZ business to distribution
By Paul McBeth
June 17 (BusinessDesk) - British American Tobacco's New Zealand business has lost responsibility for strategic decisions, leaving it principally a distribution point for the cigarette maker in an increasingly hostile market.
Since July last year, the local holding company, British American Tobacco Holdings (New Zealand), has focused on trade marketing and distributing products locally, with all portfolio strategy, brand and pricing decisions made by UK-based related entity British American Tobacco (UK and Export), which is responsible for the manufacture and supply of the group's products such as Pall Mall, Benson & Hedges and Dunhill cigarettes.
The restructure reduced the company's wage bill, with employee costs down 13 percent to $13.1 million, and also terminated BAT NZ's trademark licences, which were sold to the related UK company for a net gain of $229.9 million, statements filed with the Companies Office show. That removes $127 million of goodwill attached to BAT's trademarks and brands.
Saul Derber, BAT NZ's head of legal and external affairs, said the move wasn't to mitigate the risk posed by the government's plans to impose plain packaging on tobacco companies, rather it was the result of a groupwide review to keep the firm operating efficiently and competitively.
"In the past these reviews have resulted in moving manufacturing and product development out of New Zealand," Derber said in an emailed statement. "In the latest review, it was decided that the NZ business should now focus only on distribution and meeting the competitive challenges in its trade environment."
BAT NZ closed its manufacturing line in Napier in 2006 to shifting that work to Australia and ending 60 years of production in Hawke's Bay.
New Zealand tobacco companies face increased policy efforts using annual tax hikes of 10 percent a year to cut smoking consumption. The percentage of the population that smokes has fallen to 15 percent in 2014/15 from 18.3 percent in 2006/07, and the government wants that below 5 percent by 2025, making the nation essentially smokefree.
While those tax hikes feed through to higher revenue for firms like BAT NZ, whose sales were up 6.1 percent to $1.31 billion in calendar 2015, gross margins have been squeezed by the added duty. BAT NZ's gross profit of $202 million was at a gross margin of 15.4 percent, down from 19.2 percent a year earlier.
Net profit of $344.4 million compared to $126.5 million in 2014, and was bolstered by the intercompany sale of trademark licences. When reporting its group results in February, the parent said its New Zealand profit rose as higher prices offset lower volumes, while its Rothmans brand increased market share.
Derber said Rothmans' market share rose 1.7 percentage points to 6.3 percent in 2015, and since then was up to 8.3 percent.
BAT NZ declared and paid dividends of $117.4 million in 2015, up from $115.7 million a year earlier. A further dividend of $41.2 million was declared after the Dec. 31 balance date.
The company dominates New Zealand's tobacco market, with nearest rival Imperial Tobacco New Zealand, whose brands include Horizon, JPS, Peter Stuyvesant, West and Drum loose tobacco, reporting a 50 percent jump in profit of $30.7 million on a 16 percent gain in sales of $553 million in the year ended Sept. 30, 2015. Third-placed Philip Morris (New Zealand), which has the Marlboro brand, more than doubled profit to $2.9 million on a 57 percent gain in revenue to $155.4 million in calendar 2015.
However, Imperial Tobacco, the country's biggest cigarette maker with a manufacturing site in Petone, has the widest gross margin, which it largely maintained in 2015 at 20.7 percent compared to 20.9 percent a year earlier. Philip Morris has the skinniest gross margin at 11.3 percent in 2015, down from 13.5 percent in 2014.
(BusinessDesk)
ends
News
Hilary Timmins' Award-Winning UK Documentary Series To Inspire NZ Students
29 Jun 2020 Education
Dream Catchers, produced and directed by Hilary Timmins, celebrates the success stories of more than thirty inspirational New... more
New Zealand reaffirms support for Flight MH17 judicial process
7 Mar 2020 News
Ahead of the start of the criminal trial in the Netherlands on 9 March, Foreign Minister Winston Peters has reaffirmed the need to... more
Business
NZ Government's Economic package to fight COVID-19
17 Mar 2020 Business News
The Coalition Government has launched the most significant peace-time economic plan in modern New Zealand history to cushion the... more
NZ Government announces aviation relief package
19 Mar 2020 Business News
Transport Minister Phil Twyford today outlined the first tranche of the $600 million aviation sector relief package announced earlier... more
Living
Diversity was Key at New Zealand Trade Tasting in London
6 Jun 2022 Food & Wine
New Zealand Winegrowers Annual Trade Tasting was recently held in London, on Wednesday 4 May, in Lindley Hall.
It was the first... more
Kiwi author stuns Behind the Butterfly Gate
12 Jan 2022 Arts
Hidden behind the Butterfly Gate is where the secret has been kept for 76 years...
New Zealand writer Merryn Corcoran’s... more
Property
Fairer rules for tenants and landlords
17 Nov 2019 Property
17 NOVEMBER 2019
The Government has delivered on its promise to the over one million New Zealanders who now rent to make it fairer... more
New Zealand Government will not implement a Capital Gains Tax
17 Apr 2019 Property
The Coalition Government will not proceed with the Tax Working Group’s recommendation for a capital gains tax, Jacinda Ardern... more
Migration
Boosting border security with electronic travel authority – now over 500,000 issued
19 Nov 2019 Migration
19 NOVEMBER 2019
We’ve improved border security with the NZeTA, New Zealand Electronic Travel Authority, which helps us to... more
Christchurch reinstated as refugee settlement location
18 Aug 2018 Migration
18 AUGUST 2018
HON IAIN LEES-GALLOWAY
The announcement that Christchurch can once again be a settlement location for refugees... more
Travel
Gallipoli Anzac Day services cancelled
19 Mar 2020 Travel & Tourism
The New Zealand and Australian Governments have announced this year’s joint Anzac Day services at Gallipoli will be cancelled... more
New Zealanders advised not to travel overseas
19 Mar 2020 Travel & Tourism
New Zealanders advised not to travel overseas
more
Sport
The Skipper's Diary: Sir Richard Hadlee honouring his father and NZ's Forty-Niners
27 Oct 2019 Cricket
NZNewsUK London Editor Charlotte Everett spoke to Sir Richard Hadlee about why he’s chosen to publish his father’s... more
PREVIEW: All Blacks v England semi-final
26 Oct 2019 Rugby
The two most convincing quarterfinals winners are set to square off in a semifinal showdown for the ages when the All Blacks meet old... more
Columns
Gordon Campbell on the Gareth Morgan crusade
11 Nov 2016 Opinion
Gordon Campbell on the Gareth Morgan crusade
First published on Werewolf
The ghastly likes of Marine Le Pen in France and Geert ... more
Gordon Campbell on the US election outcome
10 Nov 2016 Opinion
Column - Gordon Campbell
Gordon Campbell on the US election outcome
Well um.. on the bright side, there (probably)... more
Kiwi Success
Congratulations to Loder Cup winner
26 Sep 2018 People
25 SEPTEMBER 2018
The Loder Cup, one of New Zealand’s oldest conservation awards, has been awarded to Robert McGowan for 2018... more
Appointments to New Zealand National Commission for UNESCO
16 Aug 2018 Appointments
16 AUGUST 2018Appointments to New Zealand National Commission for UNESCO
HON JENNY SALESA
Associate Education Minister Jenny Salesa is... more
Recruitment
Historic pay equity settlement for education support workers
14 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more
Historic pay equity settlement for education support workers
22 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more