KUALA LUMPUR (Oct 29): British American Tobacco (Malaysia) Bhd (KL:BAT) reported a 66.54% decline in net profit for the third quarter amid higher restructuring expenses.

Net profit for the three months ended Sept 30, 2026 (3QFY2026) fell to RM2.35 million from RM7.02 million a year earlier, while revenue edged up 0.41% to RM302.02 million from RM300.80 million amid higher revenue from West Malaysia.

The tobacco manufacturer in a bourse filing on Thursday showed that it incurred RM9.95 million restructuring costs for the quarter.

BAT Malaysia declared a third interim dividend of two sen per share, amounting to RM5.71 million, payable on Dec 28 to shareholders. This brings the total dividends declared for FY2026 to date to 12 sen per share.

For the cumulative nine months of FY2026, BAT Malaysia recorded a net loss of RM22.17 million, compared with a net profit of RM81.24 million in the corresponding period a year earlier.

Revenue for the nine-month period fell 21.63% to RM977.62 million from RM1.25 billion, while the group’s operating expenses rose 28.52% to RM188.28 million, largely due to one-off transition costs and business restructuring activities.

BAT Malaysia said the legal tobacco industry remained under pressure from illicit cigarette sales, with the illicit cigarettes study putting illicit incidence at 56.0% as at June 2026, compared with 54.4% in 2025.

The group said the legal tobacco market contracted by 3.9%, while its own sales volume declined by 21.1%, alongside a 1.9 percentage-point loss in market share.

Nonetheless, cost optimisation measures and new route-to-market (RTM) strategy — introduced earlier in 2026 — were beginning to show results, although the full benefits would take time as the group adjusted to its new operating model, the group said.

“Our new route-to-market model has gone live, and early operational benefits are beginning to emerge, seeing higher sales-call productivity and an increase in face-to-face engagement with our retailers,” said managing director Daniel Hsu in a statement.

“Our focus now is to make the model work harder for us by sharpening execution in the trade, improving distribution efficiency, reducing out-of-stock occurrences and leveraging our simplified cost base to support a more sustainable business,” he added.

Hsu said the group’s third-quarter performance showed that measures taken earlier in the year were beginning to take effect, with the bulk of its one-off transformation costs absorbed in the first half and two consecutive profitable quarters recorded.

“We are not yet where we want to be, but the direction is clear,” he said.

Hsu added that illicit tobacco remained the biggest drag on the legal industry, with more than half of cigarettes consumed in Malaysia continuing to evade tax.

“We welcome the government’s robust enforcement allocation under Budget 2027,” he said, adding that the group would continue engaging with the relevant authorities and other stakeholders to address illicit trade.

Shares of BAT Malaysia rose two sen or 0.49% to close at RM4.14 on Thursday, giving it a market capitalisation of RM1.18 billion.