KUALA LUMPUR: British American Tobacco (Malaysia) Bhd's (BAT Malaysia) net profit dropped 17.2 per cent to RM52.29 million in the first quarter (Q1) ended March 31, 2022 from the RM63.11 million recorded in the same period in 2021.
BAT Malaysia said this was due lower volume to its profit from operations.
Group tevenue in the same quarter eased 7.94 per cent to RM521.56 million from RM566.55 million.
BAT Malaysia said the decrease in revenue was due to a volume decline caused by the onset of the Omicron variant that affected purchasing habits during the said quarter, the persistently high illicit cigarette incidence and other seasonal factors.
During the quarter, BAT Malaysia said Dunhill's share of the premium segment had grown 0.7 percentage points (ppt) to 61.9 per cent, further strengthening its market leadership position.
The company's value-for-money brands, Rothmans and KYO, grew 1.0ppt to 35 per cent share of the segment compared to the same period last year.
Managing director Nedal Salem said BAT Malaysia was maintaining the growth trajectory of its strategic brands within its premium and VFM segments.
"Concurrently, BAT Malaysia is also poised to benefit further from its future-fit route-to-market hybrid sales model and digital transformation initiatives, all of which will play a role in creating a simpler and faster organisation," he said.
On the tobacco black market, Nedal said the illicit industry, which currently commands close to 60 per cent of the total market, continued to weigh down on the performance and operations of the legal industry, causing the government to lose about RM5 billion annually in uncollected tax revenue.
"We believe there is a risk that the tobacco black market prevalence may increase further as a result of the re-opening of borders and the resumption of cross-border trade and travel. This may potentially reverse the downtrend achieved in 2021 following measures put in place by the government to curtail this problem," he said.
He added that BAT Malaysia was encouraged by the government's move toward regulating the vape industry here.
"Vape regulations must be premised on scientific-evidence and data-driven facts so as to allow Malaysian smokers access to alternatives with reduced-risk potential to smoking and ensure the products used are compliant with quality and safety standards.
"Progressive regulations on vaping would be in tandem with BAT Malaysia's purpose of building A Better Tomorrow, as the company aims to focus on reducing the health impact of its business by offering a greater choice of less risky products to consumers," he added.