Petaling Jaya, 23 July 2009 – The legal cigarette industry continued to see a decline in volumes with a contraction of 11% year to date compared to the same period last year. The decline, as measured by Confederation of Malaysian Tobacco Manufacturers’ (CMTM) members’ sales, was echoed by British American Tobacco (Malaysia) Berhad (BAT Malaysia) as the Group’s turnover was 2.5% lower at RM1,983 million compared to RM2,035 million in the same period last year.
Despite the decline in sales volumes and lower turnover, the Group registered a positive growth in earning per share for the half year versus the same period last year. This was achieved through improved product mix driven by the strong performances of its Global Drive Brands which recorded a higher market share of 54.7%, up by 3.1 percentage points compared to the same period last year. At the same time, higher net pricing and savings from a variety of productivity and cost management initiatives added to the positive growth.
The Board of Directors has declared a first interim dividend of 113.00 sen per share, tax exempt under the single tier tax system in respect of the financial year ending 31 December 2009.
Jack Bowles, Managing Director of BAT Malaysia said, “The tobacco industry is facing many challenges. The impact of the current global economic slowdown on consumer spending power is an additional challenge faced by the industry on top of the primary concern, which is the significantly higher levels of illegal cigarettes in Malaysia.”
The Group anticipates that legal tobacco industry volumes will continue to be pressured by the high level of illegal cigarettes that has been fueled by steep and sporadic excise increases over the past five years, which has led to greater price disparity between legal and illegal cigarettes.
According to the Illicit Cigarette Survey conducted by the CMTM, the level of illegal cigarettes registered a record high reading of 27.5% at the end of 2008. Further to that, the significant and continued decline in industry volumes is a foreboding indication that the volume of illegal cigarettes have again risen significantly in 2009. Despite such challenging times, the ever-increasing efforts undertaken by enforcement agencies, especially the Royal Malaysian Customs, have continued to be highly commendable with illegal cigarette seizures increasing by 76% in the first quarter of 2009.
“The high level of illegal cigarettes will certainly continue to hamper legal industry volumes which can translate into significant tax losses to the Government. This may also pose as a challenge to the Government’s health and social agenda with the increasing availability of cheaper illegal cigarettes and a rise in organised crime through smuggling activities. Being mindful of these adverse effects, we hope the Government will consider implementing a moderate and gradual excise regime that is complemented by continued enforcement efforts and stricter penalties,” added Bowles.
On the outlook for the rest of the year, BAT Malaysia is committed to strengthening its leadership position within the tobacco industry by enhancing the brand equity of the Group’s portfolio, supported by ongoing productivity initiatives.
“Our strategic imperatives on Growth, Productivity, Responsibility and Winning Organisation have laid a strong foundation for the Company to leverage on during these challenging times and we expect our financial results for the year to be satisfactory at best,” concluded Bowles.
For more information on British American Tobacco Malaysia’s financial results, please visit www.batmalaysia.com
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 2,000 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: