BAT Malaysia foresees short-term volatility but economic recovery on long-term

BRITISH American Tobacco (M) Bhd (BAT Malaysia) envisages a short-term impact in 2023 from the volatile economic environment driven by inflationary pressures and disruptions to the global supply chain.

Such challenging operating landscape is expected to stretch disposable income, leading to down-trading from legal products to tobacco black market options, according to BAT Malaysia’s managing director Nedal Salem.

“Nevertheless, we are buoyed by the government’s recent move to exempt nicotine vapour from the Poison Act 1952 and introduce excise onto nicotine vapour which signals the intent to establish regulations for vapour products,” he pointed out in a media statement following the group’s 62nd annual general meeting (AGM) today.

“We are also encouraged by the lower levels of the tobacco black market stemming from measures announced by the government.”

Nedal Salem

In a nutshell, BAT Malaysia derived RM407 mil in its profit from operations in FY2022 compared with RM411 mil for the previous financial year. Its revenue remained stable at RM2.6 bil while gross profit stood at RM678 mil which is a 0.5% increase from RM675 mil in 2021.

For its FY2023, the group remains committed to driving its purpose of Building A Better Tomorrow.

“In the medium-term, we are confident of the economic conditions improving, the government introducing balanced regulations on vapour and accelerating its interventions to further reduce the tobacco black market,” projected Nedal.

“We aim to continue growing our tobacco heating product, glo, which represents our efforts to offer a choice of reduced-risk alternatives to adult smokers. We will also focus on investing in our value-for-money (VFM) brands and maintaining leadership in the premium segment.”

Additionally, BAT Malaysia will also continue to urge the government to establish a balanced science and evidence-based regulatory framework for vapour products while working with policymakers in the fight against the tobacco black market.

“With the incidence of black market cigarettes continuing to hover above 55%, we remain firm that this issue is detrimental not only to public health, but also has a significant adverse impact on the country’s economy,” stressed Nedal.

“We are steadfast in our commitment to champion our sustainability agenda which is supported by four pillars that prioritise harm reduction, environmental, social and governance.”

He added: “In FY2023, we will focus on driving our carbon neutrality efforts, building our community projects and work towards reducing the health impact of our business.”

At the close of today’s trading, BAT Malaysia was down 4 sen or 0.38% to RM10.62 with 81,000 shares traded, thus valuing the company at RM3.03 bil. – May 3, 2023

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