KUALA LUMPUR: British American Tobacco (Malaysia) Bhd (BAT Malaysia) expects the levels of illegal cigarettes in Malaysia to remain high as many consumers will be facing financial pressures due to the pandemic and cannot afford to buy legal cigarettes.
Managing director Jonathan Reed said approaching the second half of 2021, the tobacco black market problem is far from being resolved.
"The range of measures announced in Budget 2021 to curtail the tobacco black market is a good start. However, the government must remain focused on its efforts to stop the black market to fund economic recovery."
"It is critical that the government expands the tax framework for vape products to include vape e-liquids with nicotine which makes up 97 per cent of the market, so consumers can access alternative products of known quality," he said after concluding BAT Malaysia's 60th annual general meeting today.
For the full year, BAT Malaysia's profit from operations was at RM346 million compared with RM478 million for the previous financial year, a decline of 27.6 per cent or RM132 million.
Revenue declined 7.7 per cent or RM193 million when compared to the same period last year due to the combination of legal market contraction and downtrading.
Operating expenses were slightly higher by 2.6 per cent or RM7 million, mainly driven by strategic investments the company has undertaken to support its growing portfolio and 'Stop the Black Market' campaign and purchase of personal protective equipment and sanitisation cost as a result of the Covid-19 pandemic.
BAT Malaysia's total market share registered strong share growth across all segments reaching 51.7 per cent, up by 1.1 percentage points compared with 2019, driven by the strength of Dunhill and growing value for money (VFM) portfolio.
Net dividend announced by the company is 83 sen per share.
Jonathan said FY20 was a turnaround year for BAT Malaysia despite the difficult operating conditions.
"Our volume, profit, net turnover and share all grew in the three closing quarters of the year, providing us with a great platform to go back to growth. With this new purpose, BAT Malaysia aims to create a sustainable future for shareholders and other stakeholders," he said.