Following a significant drop in cigarette sales in the nation, British American Tobacco’s (BAT) South African division announced on Monday that it is planning to restructure the firm, a move that could jeopardize 200 employees.
The manufacturer of Dunhill and Peter Stuyvesant cigarettes said that the rise of the illegal cigarette trade was largely to blame for the decline in cigarette sales in South Africa.
Thousands At Risk Of Losing Jobs
A corporate representative claimed that South Africa’s unconstitutional restriction on cigarette sales that were put in place throughout the country’s COVID-19 shutdown in 2020 also had a part.
Retailers of basic services and forecourt shops at gas stations were not permitted to sell cigarettes or alcohol during the shutdown. BAT did not provide specifics regarding the corporate restructuring plan or which positions would be eliminated.
Around 1,800 employees were permanently employed by BAT South Africa in 2019 throughout all of its activities in South Africa. According to the corporation, it has had to lay off more than 30% of its workers since 2020.
According to the firm, during that time, as the black market grew, cigarette sales fell by about 40%. BAT South Africa calculates that up to 70% of the country’s overall cigarette market is made up of illegal cigarettes.
British American Tabacco Closes
British American Tobacco (Malaysia) Berhad’s profits per share (EPS) fell by 17% annually throughout the five years that the share price fell. The 19% annual decline in the share price is reasonably close to the change in EPS.
This shows that the market has had a very consistent picture of the stock. Instead, the share price has generally increased along with EPS.
Both the share price return and the total shareholder return should be taken into account for any particular stock. The TSR incorporates the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off, whereas the share price return just indicates the change in the share price.
The TSR perhaps provides a more complete picture of the return produced by a stock. For the past five years, British American Tobacco (Malaysia) Berhad has had a TSR of -50%. That is a higher return than the share price return that we previously mentioned. This is in part because of the dividends it distributes.