British American Tobacco pays $1.1 billion in excise duty

British American Tobacco Holdings (New Zealand), the nation's biggest tobacco company by market share. Photo / Getty Images

British American Tobacco Holdings (New Zealand), the nation's biggest tobacco company by market share, paid a little-changed $1.1 billion in excise duty last year while also declaring a special dividend of $227 million, using retained proceeds of its sale of brands two years ago.

BAT NZ paid excise on sales of $1.46b in 2017, up from $1.42b the previous year. Cost of sales was $1.4b, leaving a gross profit of $61m. Net profit fell to $15.6m from $22m in 2016, the company's annual accounts show.

BAT NZ's brands include Rothmans, Dunhill, Benson & Hedges, Winfield, Holiday, Pall Mall, Freedom and Club along with RYO (roll your own) brands such as Park Drive.

The company also paid an ordinary final dividend of $22m, bringing total payments to its parent to $249m compared with payments of $41m in 2016.

A BAT NZ spokeswoman confirmed the level of excise and that the special dividend was paid last year from the sale of its brands in mid-2015.

BAT NZ is currently in a legal dispute with smaller rival Philip Morris (New Zealand), which has alleged BAT NZ is breaching competition law by locking retailers into contracts designed to preserve its dominance in a $2.5b market.

Asked about the dispute today, the spokeswoman said BAT NZ was unable to comment in detail.

"But British American Tobacco New Zealand categorically deny the allegations made by Philip Morris New Zealand. We are confident that we are not engaging in anti-competitive conduct and will defend our position when the case is heard," the spokeswoman said.

In 2016, the government reaped a total of $1.7b in duty on tobacco sales from the three big companies in the market - BAT NZ, Imperial Tobacco and Philip Morris.

An estimated 605,000 adults burn their way through 2 billion cigarettes a year in New Zealand. Plain packaging came into effect in March this year while advertising disappeared with the Smoke-free Environments Act 1990 and the Smoke-free Environments Regulations 2007.