KUALA LUMPUR: British American Tobacco (Malaysia) Bhd's (BAT Malaysia) net profit rose to RM71.62 million in the second quarter ended June 30 2021 from RM54.61 million recorded a year ago.
Group revenue for the quarter increased to RM595.80 million from RM546.59 million previously, BAT Malaysia said in a filing to Bursa Malaysia today.
In a separate statement, the company said profit from operations for the quarter under review stood at RM193 million, a 25 per cent increase over the same period last year.
This was primarily due to BAT Malaysia's 14 per cent growth in domestic volume, which outperformed the total legal industry recovery rate of 12 per cent.
The growth in volume led to a revenue growth of 13 per cent or RM135 million compared with the first half of 2020. Volume and revenue growth versus the same period last year reflect a differing Movement Control Order environment and embryonic progress by the government in addressing the tobacco black market, it said.
BAT Malaysia declared a second interim ordinary dividend of 24.0 sen per share, amounting to RM69 million to be paid out on August 20 to shareholders.
"We delivered a strong quarter with significant improvements across all key metrics,' managing director Jonathan Reed said.
BAT Malaysia said there were early signs that measures implemented during 2021 Budget were having a positive impact but levels of illegal cigarettes in Malaysia were still at crisis point.
"Over 57.9 per cent 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 company's total market share stood at 52.4 per cent, registering an increase of 1.5 percentage points (ppt) compared with the same period last year.
BAT Malaysia'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 segment.
"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. As part of our purpose of building A Better Tomorrow, BAT Malaysia would support the legalisation of the nicotine vapour category," Reed said.