KUALA LUMPUR (May 3): Inflationary pressures and global chain disruptions are expected to impact British American Tobacco (M) Bhd (BAT Malaysia) in the financial year ending Dec 31, 2023 (FY2023).
“We expect this challenging operating landscape to stretch disposable income, leading to downtrading from legal products to tobacco black market options,” BAT Malaysia managing director Nedal Salem said in a statement on Wednesday (May 3).
Nonetheless, Nedal said the group is buoyed by the government’s recent move to exempt nicotine vapour from the Poisons Act 1952 and to levy excise on nicotine vapour. The latter is seen as a signal of Putrajaya’s intent to establish regulations for vapour products.
“We are also encouraged by the lower levels of the tobacco black market, stemming from measures announced by the government,” Nedal said.
In the medium-term, Nedal said the group is confident of economic conditions improving, and that the government will introduce balanced regulations on vapour and accelerate interventions to further reduce the tobacco black market.
“We aim to continue growing our tobacco heating product, gloTM, which represents our efforts to offer a choice of reduced risk alternatives — based on weight of evidence and assuming a complete switch from cigarette smoking — to adult smokers.
“We will also focus on investing in our value-for-money (VFM) brands, and maintaining leadership in the premium segment,” he added.
Nedal said the group will continue to urge the government to establish a balanced science and evidence-based regulatory framework for vapour products and work 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."
For FY2022, BAT’s net profit fell 7.84% to RM262.52 million from RM284.86 million a year earlier, on a 1.54% decline in revenue to RM2.6 billion versus RM2.64 billion previously.
“The group saw a planned decline in overall market share of 0.8% compared with FY2021 due to the delisting of Kent and Pall Mall brands. Annual volume fell slightly by 2% compared to FY2021 where a one-off benefit in volume was observed during the route-to-market model transition,” BAT said.
“The group’s VFM brands, KYO and Rothmans, captured an additional 1% share of market. Despite the contraction of the industry’s overall share of premium segment by 1% during the year, the group’s Dunhill brand secured a growth of 1.1% share in this segment, indicating the premium brand’s strong foothold,” the group added.
Shares in BAT ended four sen or 0.38% lower at RM10.62, giving the group a market capitalisation of RM3.03 billion.