PETALING JAYA: British American Tobacco (M) Bhd (BAT) has reported a 30.1% increase in profit before tax to RM532.5mil for the first six months from RM409.3mil in the same period last year.
Revenue increased 2.82% to RM1.82bil from RM1.77bil before, mainly due to higher domestic sales prices driven predominantly by tax increases, BAT said in a statement yesterday.
For the year to date, industry volumes had contracted by 9.2%, pressured by consecutive tax-led price increases as well as high levels of illicit and low-priced cigarettes, it said.
However, BAT’s volume contracted less than the industry, as brand-building activities mitigated the impact of the issues mentioned. Dunhill market share showed strong resilience, while Pall Mall achieved sales volume and market share gains compared with the same period last year, it said.
According to BAT managing director Bart Alkemade, the downward pressure is largely driven by the resurgence of high levels of illicit tobacco trade and the rapid growth of the very low priced cigarette segment as a result of consecutive tax-led price increases over the past two years.
“The market share for contraband cigarettes has grown to 19% at the end of 2005, up from 14% in 2004. Although we are pleased with the increase in seizures by the authorities, the incentive to evade tax and excise has also significantly increased. Malaysia currently has the second highest cigarette prices in the region after Singapore – and it is the price differential which exacerbates the smuggling problem in this country,” said Alkemade.
“BAT Malaysia hopes for a moderate and gradual increase in cigarette tax and excise together with further efforts on increased enforcement activities to help curb the growth of illicit tobacco trade,” he added.
BAT also declared an interim dividend yesterday of RM1.50 gross per share, less tax of 28%, amounting to RM308.3mil in respect of the financial year ending Dec 31, 2006, payable on Sept 21.