british american tobacco malaysia - Illicit cigarettes trade remains top concern



Petaling Jaya, 20 October 2010 – British American Tobacco (Malaysia) Berhad (BAT Malaysia) today announced a year to date decline on profit from operations of 5.8% from RM797.8 million to RM751.2 million for the first nine months of 2010 despite a 3.6% increase in the Group’s revenue over the same period. This is due to the unfavourable pack size mix which resulted from the withdrawal of packs less than 20s that offset gains from volumes and higher net pricing.

However, BAT Malaysia’s portfolio of brands continued to show commendable performance as the year to date September market share stood at 60.2%, an increase of 0.7 percentage points in comparison to the same period last year. This growth in market share was attributed to the Group’s new offering, Peter Stuyvesant International, registering 2.6% market share since its launch in June 2010. Additionally, the Company's Global Drive Brands of Dunhill, Kent and Pall Mall have recorded marginal growth in market share over the same period last year.

William Toh, Managing Director of BAT Malaysia said, “Our primary concern remains that of illicit cigarettes trade. The latest Illicit Cigarettes Study, commissioned by the Confederation of Malaysian Tobacco Manufacturers (CMTM) for the period March - May 2010, has revealed a further increase to 39.7%. This literally means that four out of every ten packs of cigarettes consumed in this country are smuggled.”

We are concerned that the recent high 3 sen excise per stick increase will further fuel this critical level of illicit cigarette trade. History has shown that whenever there are high excise increases, massive spikes in illicit cigarettes trend followed. For example, the 3 sen per stick increases for two consecutive years in 2007 and 2008 led to an enormous jump of illicit cigarettes from 25.7% in 2008 to 37.5% in 2009. Though the subsequent moderate 1 sen per stick excise increase in 2009 still resulted in an upward trend to the latest 39.7% figure, the jump was not as hefty as when there were 3 sen excise increases.”

“BAT Malaysia hopes that the Government will take serious measures to curb the growth of illicit cigarettes. The recent announcement by Ministry of Health to join in the fight against illicit cigarettes trade by looking into amending existing laws to act against the demand side of illicit cigarettes is a welcome move. We believe a holistic approach to look into reducing demand  coupled with the crackdown efforts from enforcement authorities in curbing the supply, will bring more positive results in tackling the smuggled cigarette menace,” Toh added.

Toh concluded that barring any unforeseen circumstances, the Group expects the financial results for the year to be satisfactory at best and the Group remains committed to delivering long term shareholder value through its strategic imperatives on Growth, Productivity, Responsibility and Winning Organisation.

Arising from the financial performance of the quarter under review, the Board of Directors has declared a second interim dividend of 64.00 sen per share, tax exempt under the single tier tax system in respect of the financial year ending 31st December 2010.

For more information on British American Tobacco Malaysia’s financial results, please visit www.batmalaysia.com

About British American Tobacco (Malaysia) Berhad

British American Tobacco (Malaysia) Berhad (British American Tobacco Malaysia) emerged on 3rd November 1999 from the merger of Rothmans of Pall Mall (Malaysia) Berhad and Malaysian Tobacco Company Berhad. These two long established tobacco companies brought with the merger, experience and an unrivalled portfolio of highly successful international brands to create the largest tobacco company in the country.

British American Tobacco Malaysia manufactures and markets high quality tobacco products designed to meet diverse consumer preferences. Brand portfolio includes well-established international names like Dunhill, Kent and Pall Mall. British American Tobacco Malaysia has about 1,600 employees who are involved in the full spectrum of the tobacco industry, from leaf buying and processing to manufacturing, marketing and distribution.       

British American Tobacco Malaysia is part of the British American Tobacco group, which is the world’s most international tobacco group and the second largest stock market listed tobacco group by global market share.

For more information, please contact British American Tobacco Malaysia:

Mr Chin Tuck Weng, Corporate Affairs Manager at 03-7941 7318 or Chin_Tuck_Weng@bat.com
Mr Daniel Lui, Corporate Communications Manager at 03-7491 7311 or Daniel_Lui@bat.com


Page last updated: 20/10/2010 12:13:05 GMT