BRITISH American Tobacco (M) Bhd, the only listed tobacco-related entity in Bursa Malaysia, has posted a 3.3% year-on-year (yoy) increase in its overall volume for the 3Q FY2024 period ended Sept 30, 2024 which enabled the group to post a 0.5% yoy rise in revenue to RM609.95 mil and 14% yoy surge in net profit to RM67.91 mil.
The growth was largely attributed to a better product mix and increased sales from vapour products which was partially offset by higher investment.
“Although gross profit margin dipped by 1.3% due to the lower margin of vapour products, operating expenses were significantly reduced by 28.9% as compared to last year given the group’s substantial investment in the launch of Vuse in Malaysia last year,” BAT Malaysia pointed out in a media statement.
“As a result, profit from operations for the quarter increased by 17.1% to RM99.5 mil from the same period last year.”
Following the improved showing, the board has declared a third interim dividend of 22 sen/share (3Q FY2023: 19 sen) amounting to RM62.8 mil which is payable on Nov 27.
“Our financial performance for 3Q FY2024 has been encouraging especially with the progress made by Vuse, the No. 1 global vaping brand, in steering the group’s growth in Malaysia,” commented BAT Malaysia’s managing director Nedal Salem.
“Our investments to-date are showing promising results as it has led to the group having a better product mix and increase in volume. “The group remains optimistic that its performance will continue to strengthen, backed by its multi-category portfolio as it aims to continue growing Vuse.”
In a related development, Salem noted that “it’s still too early to make an assessment on the impact of the Act 852 and its regulations” when delving on the Control of Smoking Products for Public Health Act 2024 which was recently gazetted and has taken effect with measures to be implemented in phases in 2024 and 2025.
“Additionally, we believe that it’s important for the industry to be given sufficient time to comply to the new regulations, hence we urge the government to continue to have dialogues with the industry during this transition period to ensure there is no disruption to the market,” he suggested.
Commenting on the recent Budget 2025 announcement, Salem expressed concern that “the incidence of tobacco black market remains at a high level and needs attention” despite the government having announced additional allocation for the enforcement authorities to address smuggling activities.
“We are encouraged by the recent intensified enforcement actions from the Royal Malaysian Customs Department in addressing the tobacco black market,” he stated. “While the incidence of tobacco black market has been on a declining trend since 2020, it continues to be at a high of 54.4% in July 2024.”
Added Salem: “Apart from the proactive work done on the enforcement front to curb the supply, the government should also develop solutions that would address the issues to curb demand of black-market products.”
At the close of yesterday’s (Oct 30) market trading, BAT Malaysia was up 2 sen or 0.28% to RM7.21 with 67,300 shares traded, thus valuing the cigarette manufacturer at RM 2.06 bil. – Oct 31, 2024
