British American Tobacco Malaysia - BAT Malaysia – Transforming Today for Tomorrow

Petaling Jaya, 18 April 2017 – British American Tobacco (Malaysia) Berhad (Group), held its 56th Annual General Meeting and declared its financial results for the full year ending 2016 today.

On a full year basis, the total Legal Domestic market registered a volume contraction of 25.7% compared to 2015. The excise increase in November 2015 drove a significant increase in the illegal cigarette trade and hence significantly reducing the legal market size. The Group’s domestic and duty free volumes in 2016 declined 27.8% when compared to 2015 and revenue for 2016 declined 18% (RM 825 million) versus the same period of last year.

In 2016, operating expenses were 9.1% lower than last year despite inflationary pressures. This was largely attributed to lower recharges from other entities and the Group’s continuous effort in driving further efficiencies in expenditures and overhead costs. As of December 2016, the Group recorded a one-off restructuring expense of RM 113 million in relation to the winding down of its factory operations which was announced in March 2016. The Group also recorded a one-off gain related to the disposal of the land and buildings where the factory operations are located amounting to RM 159 million.

As a result, the Group registered a decline of 25.9% and 26.2% in profit from operations and profit before tax respectively, when compared to the same period of last year.

Within the total legal market, the Group recorded a 57.1% share of market in 2016 with the leading brand DUNHILL recording a market share of 42.2%. Despite a decline of 3.9 percentage point against full year 2015 and a challenging environment, DUNHILL maintained its clear Premium market leadership. PETER STUYVESANT, the fastest growing brand within its segment, registered 6.5% share of market in 2016, with an increase of 0.9 percentage point compared to 2015.

In spite of the challenging year, the Group is fully committed in returning value to its shareholders with the Board of Directors recommending a fourth interim dividend of 77 sen per share. The Group has also announced a special dividend of 46 sen per share in relation to the utilisation of the sale proceeds from the sale of the land and buildings, after deduction of restructuring expenses, making the total net dividend declared for the financial year to be 278 sen per share (110%).

Outlook 2017

Erik Stoel, Managing Director of British American Tobacco Malaysia said, “2016 was a challenging year for the legal tobacco industry in Malaysia. We remain concerned by the current high level of illegal cigarette trade which forms the main challenge in the short and medium term for the legal tobacco industry after its sharp incidence increase from 36.9% in 2015 to a record high of 57.1% of total cigarette consumption as of December 20161. The illegal cigarette trade has surpassed the legal market volumes. The outlook of 2017 will be highly dependant on the effectiveness of the Government’s initiatives to curb the illegal trade.”
“To partially address this challenging business environment, we have taken a bold step in making a transformative change to our business model in 2016 that will sharpen our commercial capabilities whilst optimising our supply chain and transactional activities.”

Stoel asserted, “The Group has a long-standing legacy and presence within the Malaysian economic landscape. Whilst there are currently big challenges facing the tobacco industry, the Group has in place a clear strategy and commitment to invest, to help the Group navigate through these challenging times.”

For more information on British American Tobacco Malaysia, 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 markets high quality tobacco products designed to meet diverse consumer preferences. Our portfolio includes well-established international names like DUNHILL, KENT, PALL MALL and PETER STUYVESANT. British American Tobacco Malaysia has 668 employees who are involved in the full spectrum of the tobacco industry, from processing to manufacturing, and marketing to 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:

Fairuz Helmi, Head of External Affairs at 03-7491 7100 or Fairuz_Helmi@bat.com
Prianka Krishnamurthy, External Affairs Manager at 03-7491 3773 or Prianka_Krishnamurthy@bat.com