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2012 Performance driven by growth in export volumes and lower operating costs


 Petaling Jaya, 17 April 2013 – British American Tobacco (Malaysia) Berhad (BAT Malaysia) today, during its 52nd Annual General Meeting, reported a growth in profit after tax of 10.9% for the financial year 2012. The profit growth is driven by marginal domestic volume gain, together with growth in contract manufacturing for export and lower operating expenses.

In a year which marked the centenary presence of BAT Malaysia, the Group strengthened its market leadership by +1.6 percentage points to record a 3rd consecutive year of share growth, achieving 62.6% of the white cigarette market (i.e. excluding kretek cigarettes). This was driven for the main part by the stellar performance of DUNHILL with a growth of 2.6 percentage points, delivering a record 47.3% share in 2012. The overall industry consumption and legal market size continues to register decline, however the Group’s share gains led to a modest 0.2% growth in volume.

“The performance highlight in 2012 was the achievement of both share and volume growth, albeit modest, a feat that has not been attained by the Group in recent years,” said BAT Malaysia Managing Director Datuk William Toh, during the AGM press conference at the Hilton, Petaling Jaya here.

Elaborating on the Group’s performance, Toh said that BAT Malaysia’s gross profit increased by 0.5% compared to the same period last year but would have been up 1.7% without the impact of the movement of distribution costs above gross revenue. Profit before tax increased by 10.3%, largely as a result of a significant drop in operating expenses (RM92million lower) while profit after tax increased by 10.9%.

Gross revenue increased by 5.8%, stemming predominantly from both contract manufacturing volume and margin increases. The margin improvement was attributable to a costing methodology harmonization in advance of the September 2012 implementation of an upgraded Enterprise Resource Planning solution (SAP). The harmonization also led to a significant increase in inventory.

Arising from this performance, the shareholders have today agreed to the recommended total net dividend of 272 sen per share for the financial year ended 31 December 2012, representing a payout of 97.4% of earnings attributable to shareholders.

“Though 2012 was a year of significant accomplishments, concerns still remain on the widespread proliferation of illegal cigarettes in Malaysia, which currently stands at 34.5%1, meaning to say that more than 3 out of 10 packs sold in the country are illegal. Incidence of illegal cigarettes dropped 1.6% as compared to 2011, most of this decline being  attributed to a decrease in illegal kretek cigarettes (-2.4%), but was partially offset by growth in smuggled white cigarettes (+0.8%).

“Notable is the proliferation of illegal variants of certain locally registered brands which are rapidly finding their way into shops across the country on a mass scale.  According to the latest survey results1, one of the top most contraband brand is the illegal variant of a locally manufactured brand,” added Toh.

The Group however remains encouraged by the fact that 2012 witnessed a 1.6% drop in illegal cigarette incidence as compared with 2011, a clear indication that the Government’s prudent decision to not increase excise tax in 2011 and 2012, coupled with the Government’s continuous enforcement efforts to combat illegal cigarettes is starting to move the illicit trade needle in the right direction.

“On behalf of BAT Malaysia, I would like to convey our sincere appreciation to the Government and the various law enforcement agencies for seeing through prudent and sustainable measures that have helped deflate the sizable illegal cigarette industry and hope that these concerted efforts will be sustained in order to eventually put the illegal cigarette issue to rest,” said Toh.

On the Group’s outlook for 2013, Toh said that the Company is relatively optimistic and is confident of carrying forth its growth momentum into the new year, based on the strength of its portfolio and recent market share performance.

Annualised figures from Wave 1 (March – May 2012), Wave 2 (June – August 2012) and Wave 3 (October – December 2012) of the Illicit Cigarette Survey conducted by Confederation of Malaysian Tobacco Manufacturers (CMTM).

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. Its brand portfolio includes well-established international names like Dunhill, Kent, Pall Mall and Peter Stuyvesant. British American Tobacco Malaysia has about 1,000 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:

Mr. Chin Tuck Weng, Senior Corporate Affairs Manager at 03-7491 7318 or Chin_Tuck_Weng@bat.com
Mr. Paul Choo, Corporate Affairs Manager at 03-7491 7331 or Paul_Choo@bat.com