British American Tobacco Bangladesh Company (BATBC) is going to invest Tk 283.8 million to increase production capacity to meet the growing demand for cigarettes.
In a stock exchange filing on Thursday, the tobacco leader said its board approved the capital investment decision at a meeting the day before.
"The investment will be made through internal sources and bank financing based on the cash flow of the company," said the company.
The money will be spent on purchasing conversion knit, inspection, installation, spare parts, and transfer of machinery.
Following the investment disclosure, the stock rose 1.03 per cent to Tk 354.1 per share on Thursday on the Dhaka Stock Exchange (DSE).
BAT Bangladesh, however, did not provide details as to how much the production capacity will increase and what its impact will be on revenue and profit.
Company secretary Syed Afzal Hossain could not be reached for comments by phone.
The cigarette manufacturer has factories located in Dhaka and Savar, a green leaf threshing plant in Kushtia, and a green leaf re-drying plant in Manikganj.
BAT has secured a steady business growth in domestic sales as factors, such as high inflation and price hikes, could not sway the buying habits of smokers, market analysts say.
There is also a huge scope of cigarette and tobacco leaf exports to the international market, while the domestic demand has been growing. Keeping pace with that, BAT has been expanding capacity every year.
BAT Bangladesh invested more than Tk 12 billion in phases in the past four years to boost its production capacity.
BAT markets various brands namely Benson & Hedges, John Player Gold Leaf, Capstan, Star, Royals, Lucky Strike, Derby, Pilot, Flag and Hollywood.
The tobacco leader's net sales grew by 9.6 per cent year-on-year to Tk 20.51 billion in the July-September quarter this year, riding on higher domestic sales. The profit in the quarter, however, dropped 2.2 per cent year-on-year to Tk 3.97 billion.
The company declared a 150 per cent interim cash dividend for its shareholders.
The multinational company's net sales also grew 2.12 per cent year-on-year to Tk 69.4 billion in the nine months through September while profit dropped slightly by 2.5 per cent to Tk 13.22 billion during the period compared to the same period a year ago.
BAT's annual profit stood at Tk 17.88 billion in 2023, almost the same as the year before. It paid shareholders a 100 per cent cash dividend for 2023, the lowest in a decade.
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