british american tobacco malaysia - Prevalence of illicit cigarettes continues to impact legal industry



Petaling Jaya, 19 April 2011 – British American Tobacco (Malaysia) Berhad (BAT Malaysia) held its 50th Annual General Meeting at the Hilton, Petaling Jaya today. For the full year ended 2010, BAT Malaysia posted a headline increase in gross revenue by 1.1% to RM3,965 million compared to 2009 due to higher excise. However, continued prevalence of illicit cigarettes trade throughout the year and unfavourable pack size mix after the withdrawal of packs less than 20 sticks led to a lower net turnover (gross revenue less Government levies) by 4.1% and subsequently 2.1% decline in profit after tax at RM731 million.

Commenting on external factors impacting the Group’s 2010 performance, William Toh, Managing Director of BAT Malaysia said, “The operating landscape in 2010 was indeed very tough as we saw illicit cigarettes trade surged to a new record level compounded further by a high excise increase in October 2010.  While heavy excise increases come understandably from the Government’s need to drive its health agenda, it plays into the willing hands of the illicit cigarettes smugglers. The illicit figures have now jumped to 38.2% of the country’s total cigarettes market based on two waves of the Illicit Cigarettes Survey in 2010, an indication that more than 9 billion sticks of illicit cigarettes were sold in 2010. This extremely high level of illicit cigarettes undermines all Government efforts to reduce consumption and impacts not only the legal industry but also the Government in terms of revenue in tax money."

The commitment demonstrated by relevant law enforcement agencies through intensified enforcement efforts over the past year have been encouraging, especially the Royal Malaysian Customs who have stepped up its battle against illicit cigarettes and charged those caught dealing in illicit cigarettes in court. However, the penalties meted out need to be more deterrent considering the severity of illicit cigarettes problem in this country. A fine will not be a deterrent to such illegal operators as their ill gotten profits will be more than enough to cover any fine that is imposed by the relevant authorities.

However, amidst this primary challenge which has led to declining volume and profit, the Group recorded 60% share of the legal market for the full year, a 0.4 percentage point market share growth compared to 2009 underpinned by the many initiatives which were undertaken to drive growth and productivity.”

Toh concluded that the Group is cautious on the outlook of growth for 2011 as the legal industry will continue to be greatly impacted by Government’s future excise increases and high incidence of illicit cigarettes trade therein leading to down trading pressures and a shrinking legal market size. The Group however remains committed to delivering long term shareholder value by enhancing the strength of its brand portfolio and through its strategic imperatives on Growth, Productivity, Responsibility and Winning Organisation.

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: 19/04/2011 13:38:54 GMT