KUALA LUMPUR: British American Tobacco (Malaysia) Bhd's (BAT) net profit fell 35.1 per cent to RM47.53 million for the second quarter (Q2) ended June 30, 2023 (FY23) from RM73.25 million a year ago, on the back of softer market conditions.
However, revenue for the quarter rose 6.4 per cent to RM678.12 million from RM637.46 million previously.
A filing to Bursa Malaysia showed that the company registered lower earnings per share of 16.60 sen compared to 25.70 sen.
For the cumulative period of six-month, BAT Malaysia recorded a lower net profit of RM87.85 million from RM125.54 million a year ago, while revenue declined to RM1.07 billion from RM1.16 billion.
The company's premium and aspirational premium brands recorded a drop in market share of 0.8 per cent and 0.1 per cent, respectively, to 33 per cent and 6.7 per cent compared with the same period last year.
Consistent with the downtrading trend observed within the legal combustible market, the company's value-for-money (VFM) brands saw an increase of 0.5 per cent share of the market share to 11.6 per cent.
BAT Malaysia primarily focused on growing its new category segment, offering reduced-risk alternatives to adult smokers in the first half of 2023 (1HFY23).
To this end, BAT Malaysia heightened its investment towards the launch of its vapour products, resulting in a profit from operations of RM132 million compared with RM191 million in the same period last year.
Commenting on the financial performance, BAT Malaysia managing director Nedal Salem said the company's financial results were within expectations given the tough economic climate.
He added that the company expects this impact to be short-term as it continues progressing into a multi-category organisation, backed by its trajectory in the new category segment.
"To this end, the company aims to continue growing its tobacco heating product, gloTM, while preparing to launch Vuse, our vapour product which is currently the number one global vaping brand.
"Both Glo and Vuse represent the company's efforts to offer a choice of reduced-risk alternatives to adult smokers," he said in a separate statement.
According to Salem, the tobacco black market continues to impact the industry, and BAT Malaysia will continue working with the relevant authorities to bring down the incidence of black-market cigarettes, which stubbornly hovers above 55 per cent.
He said the company is positive that the government will continue to drive the fight against the high level of tobacco black market and hopes that the Budget 2024 tabling will continue to see current measures like tightening controls on the importation of cigarettes, enhancing controls along the Malaysian coastline and at landing points including private jetties, and the continued implementation of a special rewards scheme for enforcement agencies be maintained.
"The company remains firm that this issue is detrimental not only to public health but also to the country's economy," he noted.
For the remaining financial year, BAT Malaysia will also be driving its sustainability agenda, which is supported by four pillars that prioritise harm reduction, environmental, social and governance.
In this space, the company will focus on driving its carbon neutrality efforts, building its community projects and working towards reducing the health impact of its business.