MALAYSIA’S only listed cigarette manufacturer British American Tobacco (M) Bhd saw its net profit for 2Q FY2024 ended June 30, 2024 shrunk 23.6% year-on-year (yoy) to RM36.28 mil (2Q FY2023: RM47.53 mil) while its revenue slid 5.6% yoy to RM640.46 mil (2Q FY2023: RM678.12 mil).
Profit from operations was RM56 mil compared to RM73 mil a year ago as the group continued to invest into growing Vuse which it deemed as the No.1 global vaping brand in Malaysia.
According to BAT Malaysia, its premium brand, Dunhill, continued to strengthen its market leadership in Malaysia by posting an increase of 0.4% to record 30.9% of market share compared to the previous quarter.
“This demonstrates a resilient performance despite legal volume continuing to be impacted by consumer downtrading and shift from traditional tobacco to vapour,” it pointed out in a media statement.
“Our Aspirational Premium brands saw a 0.2% decrease in market share to 6.0% whereas the market share of our Value-For-Money brands remained unchanged at 12.7% compared to the previous quarter.”
For the six-months under review, BAT Malaysia said it recorded an overall dip in volume compared to 1H FY2023 due to the softer market in 1Q FY2024 although the group’s volume in 2Q FY2024 rebounded to reflect a position of gradual recovery.
“Coupled with higher operating expenses as the group invested into growing Vuse, profit from operations consequently declined by 22.3% to RM102 mil,” it noted.
A second interim ordinary dividend of 12 sen/share amounting to RM34.2 mil payable on Aug 22 has been declared by BAT Malaysia’s board of directors.
“Our financial results were within expectations given the continued investments to grow Vuse in Malaysia,” commented the group’s managing director Nedal Salem.
“Our ambition is to build A Better Tomorrow and the group remains confident that its strategic investments to grow the No.1 global vaping brand will help to deliver sustainable growth in Malaysia.”
Nevertheless, Salem expressed concern that the tobacco black market continues to impact the industry as such incidence continues to hover at 54.8%.
“While the group is encouraged by the intensified efforts from law enforcement agencies to enforce against the tobacco black market, it believes that the government should consider addressing the issue by reviewing its taxation policies to complement its intensified enforcement initiatives in the upcoming Budget 2025 tabling,” opined Salem.
“The group also believes that the Control of Smoking Products for Public Health Act 2024 is a step in the right direction for the industry and that any regulations introduced must be sensible and evidence-based to ensure that it can be enforced effectively and deliver its intended objectives without fuelling the growth of the tobacco or vapour black market.”
At the close of yesterday’s (July 24) trading, BAT Malaysia was up 3 sen or 0.36% to RM8.37 with 85,500 shares traded, this valuing the company at RM2.39 bil. – July 25, 2024
