KUALA LUMPUR (May 23): British American Tobacco (Malaysia) Bhd (KL:BAT), or BAT Malaysia, posted a 34.46% year-on-year (y-o-y) lower net profit for the first quarter of 2024, dragged down by higher operating expenses due to ongoing investments as the tobacco group transitions towards a multicategory business, coupled with inflationary pressures and higher cost of vapour products.

Net profit for the three months ended March 31, 2024 (1QFY2024) was RM29.99 million — the lowest level seen in over two decades since 4QFY2000 — against RM40.32 million a year earlier. Earnings per share slipped to 10.5 sen compared to 14.1 sen a year ago, according to the group’s filing on Thursday.

Quarterly revenue, however, grew 5.57% to RM411.97 million from RM390.23 million in 1QFY2023, thanks to its new vapour brand Vuse, which was introduced to the market in the second half of last year.

The group has declared a first interim dividend of 10 sen per share — the lowest ever declared — amounting to RM28.55 million for FY2024, payable on June 20.

On a quarter-on-quarter basis, BAT Malaysia’s net profit declined 36.69% from RM47.36 million in 4QFY2023, as revenue fell 35.21% from RM635.86 million.

“Our financial performance for 1QFY2024 is reflective of an environment impacted by a growing tobacco black market and a notable consumer shift from traditional tobacco to vapour,” BAT Malaysia managing director Nedal Salem said in a statement.

Nevertheless, Nedal said the group remains optimistic that its financial performance will be strengthened in FY2024, supported by an improved Malaysian economy on the back of resilient domestic consumer spending and a recovery in exports.

"The group is also confident that its strategic pivot towards offering reduced-risk alternatives via Vuse will fuel its growth trajectory and drive its transition into a multicategory business," it added.

Shares in BAT Malaysia closed four sen or 0.44% higher at RM9.04 on Thursday, giving the group a market capitalisation of RM2.58 billion.