DESPITE seeing its volume growing for the first time since 2002 which also enabled its profit to grow for the first time since 2015, British American Tobacco Malaysia Bhd (BAT Malaysia) remains wary of the adverse impact of illicit cigarette trade on its business prospects.
The only listed cigarette manufacturer on Bursa Malaysia nevertheless acknowledged that its volume increase was mainly due to the reduction in the tobacco black market by 6.1% during its FY2021 from FY2020.
“At the same time, we ask the Government to be vigilant in the face of a tobacco black market that commands almost 60% of the total market and causes Malaysia to lose RM5 bil annually in uncollected taxes,” BAT Malaysia’s managing director Nedal Salem pointed out in a media statement.
“We know that over-regulation has created this crisis, so we urge caution in this regard.”
More broadly, BAT Malaysia has described its FY2021 performance as “remarkable” when announcing its financial results for 4Q FY2021 ended Dec 31, 2021.
The growth momentum comes from an increase in volume and share of market which in turn improved revenue and profit from operations as well as a strong quarter-on-quarter improvement in its financial performance (a 41% jump to RM862 mil in 4Q FY2021 from the preceding quarter).
“This growth in volume led to a revenue of RM2.6 bil for FY2021 compared to RM2.3 bi in FY2020 (growth of 14%) and a profit from operations of RM411 mil compared to RM346 mil in FY2020 (increase of 19%),” noted BAT Malaysia.
“Consistent with the volume growth trajectory, BAT Malaysia’s total market share stood at 52.4%, registering an increase of 0.8ppt (percentage point).”
The company attributed its encouraging market share performance to the strength of its strategic brands, namely Dunhill, Rothmans and KYO.
BAT Malaysia’s portfolio grew in all segments with Dunhill growing by 1.9ppt in the premium segment, Peter Stuyvesant and Pall Mall by 0.7ppt in the aspirational premium segment and Rothmans and KYO by 1.5ppt in the value-for-money (VFM) segment.
“Moving forward, we are optimistic of the company’s prospects, barring any unforeseen circumstances, as we continue working towards our purpose of building A Better Tomorrow by reducing the health impact of our business,” added Nedal.
A fourth interim ordinary dividend of 27 sen/share amounting to RM77 mil will be paid out on March 4 to shareholders.
At the close of yesterday’s trading, BAT Malaysia was unchanged at RM12.40 with 273,000 shares traded, thus valuing the company at RM3.54 bil. – Feb 9, 2022
