KUALA LUMPUR (July 30): British American Tobacco (Malaysia) Bhd's (KL:BAT) second-quarter net profit fell 79.11% to RM10.64 million from RM50.95 million a year earlier, weighed down by higher operating expenses.
Earnings per share for the three months ended June 30, 2026 (2QFY2026) dropped to 3.7 sen from 17.8 sen, according to the tobacco manufacturer's bourse filing on Thursday.
Revenue for the quarter fell 17.52% year-on-year to RM515.29 million from RM624.75 million.
BAT Malaysia said operating expenses increased 32.3% to RM77.19 million from RM58.33 million in 2QFY2025, mainly due to costs associated with the implementation of the group's new Route-to-Market model.
The group had previously said that the adoption of the model from July 1 was aimed at reducing employees' headcount as part of a workforce optimisation.
BAT Malaysia declared a second interim dividend of five sen per share — compared to 12 sen a year earlier — payable on Sept 28. This brings the year-to-date dividend payout to 10 sen per share, versus 19.5 sen in the same period last year.
For the first half of FY2026, the group slipped into the red with a net loss of RM24.51 million, compared with net profit of RM74.22 million a year earlier, as revenue dropped 28.64% to RM675.59 million from RM946.74 million.
The group said the first-half performance reflects a more challenging operating environment, shaped by continued down-trading pressure from the price gap with illicit products and the residual effects of new regulation impacts related to the retail display ban introduced in 2025.
"We will continue to focus on building brand awareness and penetration, cost discipline and operational efficiency as we stabilise the group’s performance and advance towards gradual recovery with the new Route to Market model, while continuing to drive sustainable value for the business," said managing director Nedal Salem in a statement.
Reinforcing the need to address the tobacco black market, Salem said this requires a comprehensive approach that tackles the availability of illicit products through stronger disruption of supply networks, as well as the demand driven by affordability gaps and consumer access to lower-priced alternatives.
Shares of BAT Malaysia closed nine sen or 1.84% higher at RM4.97 on Thursday, valuing the group at RM1.42 billion. The stock has gained 12% so far this year.