PETALING JAYA: British American Tobacco (Malaysia) Bhd saw a lower net profit of RM50.77 million for the first quarter ended March 31, from RM88.6 million in the previous corresponding quarter driven by lower domestic volumes from the legal market, seasonality, stock in trade corrections and reduced duty-free sales due to Covid-19.
Revenue for the quarter under review decreased by 22.5% to RM481 million compared to the same period last year.
Operating expenses were marginally lower compared to the previous quarter. However, the improvement in operational efficiencies were not enough to offset revenue loss.
The group declared a first interim dividend of 17 sen per share.
Total legal industry volume declined by 11% against the same period last year, as persistently high levels of illegal cigarette sales and illicit nicotine vaping products continued to impact the legal tobacco market.
BAT Malaysia managing director Jonathan Reed said the group’s financial performance was within expectations, however, due to the supply disruptions of legitimate tobacco manufacturers during the MCO period, consumers were forced to turn to cheap, black market cigarettes.
“The government is losing RM 5.1 billion in tax revenue to the tobacco black market at a time when the country needs every ringgit for the Covid-19 fight and the subsequent recovery.
“Now, more than ever, there must be focus given over to ensure that effective structural reforms are put in place to tackle this problem once and for all. The sustainability of the industry and livelihoods of our employees will be very much dependent on tackling the tobacco black market scourge, a regulated nicotine landscape and sensible fiscal policies,” he said.