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British American Tobacco (BAT) Bangladesh registered a 9.35 per cent year-on-year profit growth to Tk 4.56 billion in January-March, driven by higher exports of tobacco leaf and increased sales of sticks in the domestic market.
The company's leaf exports more than doubled year-on-year to Tk 956 million while domestic cigarette sales grew by 14 per cent to Tk 21.73 billion in the first three months of the year.
As a result, revenue jumped 16 per cent year-on-year to Tk 22.68 billion in the first quarter.
BAT has secured a steady business growth for the past three years, even amid several economic adversities, riding on increased demand for cigarettes.
Factors like high inflation and product price increase could not change the buying habits of the inelastic product's consumers, which helped the company's business to keep growing, market analysts said.
Md Azizur Rahman, company secretary of BATBC, could not be reached for comments.
An official of the company, on condition of anonymity, said leaf exports had jumped significantly during the quarter as the company started exporting to China and the Maldives.
China is a huge market of cigarette. BATBC could not export finished products (cigarette sticks) to China due to various complexities so it exports leaf there.
The company official said revenue from leaf exports would increase even more in future as the company had invested Tk 5.74 billion in its Savar factory last year to expand capacity so it could take full advantage of export opportunities.
Cigarettes are exported to many countries from Bangladesh. Tobacco green leaf is also exported to EU countries, USA, Arab Emirates, Indonesia, Korea and South Africa.
In 2022, BAT Bangladesh exported leaf worth Tk 5.58 billion.
BATBC markets brands namely Benson & Hedges, John Player Gold Leaf, Capstan, Star, Royals, Lucky Strike, Derby, Pilot, Flag and Hollywood.
The cigarette maker has factories located in Dhaka and Savar, a green leaf threshing plant in Kushtia, and a green leaf re-drying plant in Manikganj.
The board of directors of the company at a meeting on Wednesday approved a fresh investment of Tk 607 million to enhance its production capacity.
With the money, it will purchase winnower tobacco recovery equipment worth Tk 109 million, Machine 20s Hinge-lid maker and packer line equivalent to Tk 276 million and centralized online UPS worth Tk 222 million.
"The investment will be funded from internal sources and bank financing based on cash flow of the company," said the company in a disclosure.
The company's net operating cash flow per share turned negative at Tk 2.09 for January-March this year as against Tk 6.11 for the same period last year due to higher value added tax, supplementary duty, and health development surcharge and tax payments.
BAT Bangladesh's annual profits grew 19.4 per cent year-on-year to Tk 17.87 billion in 2022 and the company declared 200 per cent cash dividend for the year.
Despite the business growth, the stock has been languishing at the floor price of Tk 518.70 since September 6 last year.