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British American Tobacco Malaysia braces for tough times ahead


Petaling Jaya, 19th February 2009 – British American Tobacco (Malaysia) Berhad’s volumes declined in tandem with the tobacco industry volumes with its share of market remaining stable as compared with 2007. On the whole, the 2008 industry volumes, as measured by the Confederation of Malaysian Tobacco Manufacturer member's sales, declined by 1.5% versus the same period last year driven by high levels of illegal cigarettes as well as the significant tax-led price increase in September 2008.

Commenting on the latest results, Jack Bowles, Managing Director of British American Tobacco Malaysia (BAT Malaysia) said, “The impact of the economic crisis on consumer spending power adds to the mounting challenges faced by the industry. The key challenge to the industry remains the ongoing high level of illegal cigarettes in Malaysia which continue to persist as a result of high and occasionally sporadic tax increases over the past four years that have led to greater price differentials between legal and illegal cigarettes. Mindful of this, the Company hopes that the Government will consider tax increases that are moderate and gradual.”

The latest study on contraband and unauthorised cigarettes incidence has recorded illegal cigarettes level at a high of 24.5%. This tax-led resilience of illegal cigarettes would have been much worse if not for the ever-increasing and highly commendable efforts undertaken by enforcement agencies, especially the Royal Malaysian Customs, who have continuously step up their enforcement efforts on smuggling activities.

“The issue of illicit trade is not only a concern for the tobacco industry. It is also a fiscal concern for the Government who is faced with significant tax losses. There are also challenges to the Government’s health and social agendas with the increasing availability of cheaper illegal cigarettes and the increase in organised crime through smuggling activities,” added Bowles.

On the financial results, despite the quarter recording a lower profit before tax compared to the preceding quarter, BAT Malaysia’s turnover for the full year ended 2008 was 7.9% higher at RM4,135.2 million compared to RM3,830.9 million in 2007 as higher pricing and better sales mix offset lower sales volumes from the domestic market, leading to a posting of RM1,081.2 million profit before tax for the financial period under review.

The Board of Directors of BAT Malaysia recommends a net final dividend of 76.00 sen per share for financial year ended 31 December 2008, subject to the approval of shareholders at the Company’s forthcoming Annual General Meeting on 20 April 2009. This brings the total net dividend for the 2008 financial year to 265.00 sen per share.

Jack Bowles said, “The industry is already operating in a challenging environment with the high incidence of illegal cigarettes, excise increases and enhanced regulations. As a result, coupled with the current global economic meltdown, there is no room for complacency. Moving into 2009, British American Tobacco Malaysia remains committed to protecting and enhancing our leadership position and delivering long-term shareholder value with its strong brand portfolio and continuing to focus on our growth, productivity, responsibility and winning organisation strategic initiatives. Given the said challenges, we are cautiously optimistic on the outlook for 2009.”

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

About British American Tobacco Malaysia

British American Tobacco (Malaysia) Berhad (BAT 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.

BAT 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. BAT Malaysia has over 2,000 employees who are involved in the full spectrum of the tobacco industry, from leaf buying and processing to manufacturing, marketing and distribution.       

BAT 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: