KUALA LUMPUR (Oct 30): British American Tobacco (Malaysia) Bhd’s (BAT Malaysia) net profit declined 20.89% to RM59.54 million or 20.90 sen per share for the third quarter ended Sept 30, 2023 (3QFY2023) compared with RM75.25 million or 26.4 sen per share in the previous year’s corresponding quarter as investment in tobacco heating and vapour products more than offset price adjustments — its first since 2018.

Quarterly revenue was down by 9.01% to RM606.8 million from RM666.9 million in 3QFY2022, the tobacco group’s filing on Bursa Malaysia showed on Monday.

BAT Malaysia attributed the lower earnings for 3QFY2023 to increased investment in launching tobacco heating and vapour products that provide reduced-risk alternatives to adult smokers while also implementing a modest price increase in its Premium and AP segments due to rising inflation and increased business costs, marking the group's first price adjustment in five years.

As a result, the group’s operating profit decreased 26.85% to RM84.95 million in 3QFY2023 from RM116.14 million in 3QFY2022.

During the quarter, BAT Malaysia said it undertook the strategic decision to implement a modest price increase in its premium and aspirational premium (AP) segments prompted by rising inflation and increased cost of business.

The group declared a third interim dividend of 19 sen per share, amounting to RM54.2 million, payable on Nov 28.

For the cumulative nine months ended Sept 30 (9MFY2023), BAT Malaysia’s net profit was reduced 26.6% to RM147.38 million from RM200.79 million while revenue fell 8.26% to RM1.68 billion from RM1.83 billion due to volume weakness experienced by the group.

BAT Malaysia managing director Nedal Salem said the group is confident that its purpose to Build A Better Tomorrow will drive long-term growth, backed by its new category segment. On top of that, it is also encouraged by the government’s consistent efforts to tackle the tobacco black market, which remains high.

“We appreciate that the government acknowledges the severity of the tobacco black market, and continues to implement measures to tackle this issue, which causes Malaysia to lose RM5 billion annually in uncollected taxes. We believe that the recent measures announced during the tabling of the 2024 Budget, when implemented effectively, will further play a role in tackling the high levels of the tobacco black market. The group is also supportive of the government’s decision to maintain the current excise level, to not further fuel the tobacco black market.

“We are encouraged by the government’s commitment to regulate the vape industry in Malaysia. We strongly urge the government to adopt policies that are evidence-based and data driven to ensure that Malaysian vape consumers have access to reduced-risk products that are compliant with quality and safety standards. BAT Malaysia will strongly support any sensible, pragmatic regulations on vaping, in tandem with our purpose to build A Better Tomorrow,” he added.

BAT Malaysia’s share price has fallen over 16% year-to-date to close at RM9.38 on Monday, giving it a market capitalisation of RM2.68 billion.