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.”