Signage is pictured on the front of the headquarters quarters of British American Tobacco at Temple Place in central London on January 17, 2017. British American Tobacco agreed on January 17, 2017 to pay almost 50 billion USD for control of US peer Reynolds American in a move which targets the lucrative United States market and the fast-growing e-cigarette sector. / AFP PHOTO / Isabel Infantes
PETALING JAYA: A sharp decrease in cigarette sales volume led British American Tobacco (M) Bhd
(BAT) to post a 33.8% lower net profit year-on-year in the first quarter (Q1) ended March 31, 2017.
In a filing with Bursa Malaysia, the cigarette manufacturer and retailer announced that its Q1 net profit narrowed to RM114.23mil from RM172.61mil a year earlier.
Revenue declined by 24.5% or RM250mil to RM770.72mil compared to the same period last year in line with the volume decline, said BAT.
In the quarter under review, BAT’s domestic and duty free sales volumes fell by 11.6%, in contrast with the preceding quarter. This drop was primarily attributed to the growth in illegal cigarettes incidence.
The company, which is expected to cease its manufacturing operations this year, said the market outlook of 2017 would be very much dependant on the recovery of the legal cigarette market.
“The group remains concerned with legal volumes continuing to be impacted by the current high incidence of illegal cigarette trade as a consequence of the unprecedented hike in November 2015, as well as the challenging economic environment and poor consumer sentiments.
“Illegal cigarette trade has surpassed the legal market volumes with more than one out of two packs of cigarettes sold being illegal,” added BAT.
Based on a study, the share of illegal cigarette trade rose drastically from 36.9% in 2015 to a record high of 57.1% in December 2016.
BAT declared a first interim dividend of 40 sen per share. Its earnings per share stood at 41.6 sen as at March 31.
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