by HARIZAH KAMEL
BRITISH American Tobacco (M) Bhd’s (BAT) net profit for the second quarter ended June 30, 2021 (2Q21) rose year-on-year (YoY) to RM71.62 million, from RM54.61 million a year ago, largely driven by domestic volume growth.
In an exchange filing today, BAT said its 14% growth in domestic volume outperformed the total legal industry recovery rate of 12%.
BAT earnings per share for the quarter were also higher at 25.10 sen compared to 19.10 sen previously. Its quarterly revenue increased to RM595.80 million from RM546.59 million in 2Q20.
MD Jonathan Reed said there are early signs that measures implemented during Budget 2021 are having a positive impact but levels of illegal cigarettes in Malaysia are still at crisis point.
“Over 57.9% of the tobacco market is dominated by criminal syndicates. In response to Budget measures targeting transhipment loopholes, these gangs have shifted their operations to coastal smuggling. The government must enhance anti-smuggling enforcement in coastal areas.
“To effectively tackle the tobacco black market, enforcement must be accompanied by measures to address affordability pressures for consumers. There must be solutions to address the significant price difference between expensive legal and cheap black market products,” Reed highlighted.
The group’s total market share stood at 52.4%, registering an increase of 1.5 ppt compared with the same period last year.
BAT’s portfolio grew in all segments with Dunhill growing by 2.7ppt in the premium segment, Peter Stuyvesant and Pall Mall by 1.0ppt in the aspirational premium segment and Rothmans and KYO by 4.4ppt in the value-for-money (VFM) segment.
The remainder of 2021 will see continued focus on the group’s purpose of building “A Better Tomorrow” for all of its stakeholders which will be achieved by building a long-term sustainable business.
For the second half of 2021, this will require the progressive recovery of the legal cigarette market and the introduction of a regulated nicotine vaping framework
“In addition to continuing efforts to mitigate the tobacco black market, it is also critical for the government to introduce a regulatory framework for nicotine vaping products.
“Regulations would provide the 1.1 million Malaysians who vape with products of known quality and safety. It would also establish a significant new revenue source for the government. BAT would support the legalisation of the nicotine vapour category,” Reed concluded.
BAT has declared a second interim ordinary dividend of 24.0 sen per share, amounting to RM69 million to be paid out on Aug 20, 2021.