BAT banks on recovery of legal tobacco sector

PETALING JAYA: British American Tobacco (M) Bhd’s growth strategy for the financial year 2020 (FY20) will be dependent on the recovery of the legal tobacco market, regulated nicotine landscape, sensible fiscal policies as well as a resolution to the affordability issues affecting consumers.

At its AGM yesterday, BAT Malaysia urged shareholders to play a more proactive role in speaking up against the tobacco black market.

The AGM illustrated the severe impact of the tobacco black market on the industry as well as BAT Malaysia’s financial performance.

Managing director Jonathan Reed said the group was forced to aggressively manage its cost base in order to deliver on shareholder value, as the tobacco black market continued to grow in 2019 despite various initiatives by the government.

“This is not sustainable in the long term. Legal players like us are vital to the nation’s economic recovery and growth.

“Simply put, legal businesses contribute valuable tax revenues that can be used towards rebuilding and reigniting the economy post the Covid-19 national crisis, ” he said in a statement.

Reed added that more drastic and radical actions are required to effectively stop the black market.

“We are ready to invest our resources to continue tackling this issue. However, full recovery can only happen if we are able to work hand-in-hand with all relevant parties to implement effective structural reforms to manage the extraordinarily high levels of illegal trade.

“We encourage and urge the public, including our shareholders, to join in the fight, speak up and support initiatives that will eradicate this issue.

“We believe that if we band together and bring it to light, the government and policymakers will listen and take definitive action to combat this problem once and for all, ” said Reed.

BAT Malaysia’s volume in FY19 declined by 11.7% despite the value for money (VFM) segment growth of 5.8 percentage points as compared to the previous financial year.