PETALING JAYA: British American Tobacco (M) Bhd’s (BAT) net profit for its third quarter ended Sept 30,2020 dropped 23% to RM63.74mil from RM83.13mil in the previous corresponding period, as business was affected by the Covid-19 pandemic and the growing tobacco black market.
In a filing with Bursa Malaysia, BAT said the group’s duty-free business operations remained impacted by Covid-19 travel restrictions that continued in the third quarter.
Revenue in the third quarter increased to RM627.52mil from RM584.34mil in the previous corresponding period. BAT declared a third interim dividend of 21 sen per share.
For the nine-month period ended Sept 30, BAT’s net profit dropped to RM169.12mil from RM248mil in the previous corresponding period, while revenue declined to RM1.66bil from RM1.85bil a year earlier.
BAT said the decline was mainly attributed to legal market contraction as a result of high illicit cigarette volume, growth of illicit vaping, market downtrading and lower duty-free sales with regional and international travel restrictions.
“This was partially offset by the benefit of cost rationalisation that the group has undertaken, ” it said.
Commenting on its prospects, BAT said the tobacco and vaping black market would continue to be a significant threat.
“Given the economic slowdown, coupled with the expected subsidies and loan moratorium removal later in the year, consumer affordability will be further stretched.
“The group has positioned a robust portfolio in the value-for-money segment to capture its fair share of downtraders. However, the group is unable to effectively compete against the black market without significant enforcement and excise reform.”
Did you find this article insightful?
100% readers found this article insightful