BAT Blames Vaping, Illicit Cigarettes On 28pc Profit Drop

By CodeBlue | 01 November 2019

The company reported a sharp fall in its revenue and profits.

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KUALA LUMPUR, Nov 1 – British American Tobacco (BAT) Malaysia recorded a 28.3 per cent decline to RM340 million in profit from operations in the third quarter of the year on a year-to-date basis.

The tobacco company, however, recorded a 5.2 per cent increase in quarter-on-quarter performance in profits from operation to RM113 million, which it said was due to aggressive cost containment measures.

The company’s revenue also fell by 8 per cent quarter-on-quarter and 10 per cent year-on-year.

“The grim fact is, that the current scenario of cheap illegal and contraband tobacco products has further deteriorated in Malaysia despite the efforts by law enforcement agencies like the Royal Malaysian Police and the Royal Malaysian Customs to clamp down on the cartels running these syndicates,” said BAT Malaysia managing director Erik Stoel in a statement.

BAT Malaysia is planning to amp up its business in Malaysia with the launch of tobacco heated products, first in Southeast Asia, in the remaining months of 2019, but said this could only be done with regulations and tighter restrictions on the entry of illegal cigarettes into Malaysia.

Stoel also urged the Ministry of Health (MOH) to work with other stakeholders to curb illegal cigarette trade.

“When are we going to realise that this is an issue that goes beyond tobacco duty evasion? We need more players like MOH bearing down on the inflow of cheap contraband cigarettes that does not comply with tobacco control laws into the country.

“It is a known fact that illegal cigarette players do not play by any rules – they cross borders illegally, smuggle in cheap contraband cigarettes, ignore any rule or regulations like pictorial health warnings and then proceed to sell without any conscience below minimum price to anyone,” he added.

According to BAT Malaysia, total legal industry volume declined by 11 per cent in the third quarter of the year when compared to the same period last year largely attributed to high levels of illegal cigarette trade incidence which now stood at 65 per cent and impact from the sales and services tax (SST).

The tobacco company also blamed poorer legal cigarette volumes on the rapid growth of vaping in Malaysia.

“It is a known fact that illegal cigarette players do not play by any rules – they cross borders illegally, smuggle in cheap contraband cigarettes, ignore any rule or regulations like pictorial health warnings and then proceed to sell without any conscience below minimum price to anyone.

“This is a clear indicator that MOH’s biggest enemy to their public health objective is the illegal trade business. To this end, we urge MOH to focus their sights on this cheap contraband trade and collaborate with like-minded parties to manage this issue.”

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