KUALA LUMPUR: British American Tobacco (Malaysia) Bhd’s (BAT) net profit eased 7.92 per cent to RM88.60 million in the first-quarter (Q1) ended March 31, 2019, from RM96.23 million a year ago.
In an exchange filing yesterday, BAT Malaysia said the lower earnings was dragged by the continued dominance of high illegal cigarettes trade and price increase as well as smoking restriction at eateries.
Its Q1 revenue dropped 2.62 per cent to RM620.96 million from RM637.65 million, largely attributed to the Sales and Service Tax led pricing and high illegal cigarette incidence.
BAT Malaysia managing director Erik Stoel said although legal players had conformed to all current and existing regulations governing the industry, there was still a market majority that did not and would not comply to any form of regulations or excise.
“Clearly, despite the increased enforcement actions, the illegal cigarette syndicates are as rapidly evolving their tactics and operations to avoid detection by the authorities.
“These sophisticated tactics have seen syndicates resorted to selling their contraband off premises via social media, through chat groups or via home delivery service,” Stoel said in a statement.
BAT Malaysia urged the government to consider a more holistic and comprehensive solution that addresses the real motivations behind the continued consumption of illegal cigarettes – affordability, as well as applying enforcement activities at a higher level of intensity.”
“Another key area that requires urgent and immediate focus is around the introduction of a more consistent regulatory framework to govern the tobacco industry, especially in the new category of Potentially Reduced Risk Products (PRRPs).
“There seems to be a lack of consistent application of the law surrounding price approvals which is unjustified as it has delayed the launch of our tobacco heated product (THP), Glo,” he said.
He said the delay by the Ministry of Health’s Tobacco Control Sector was unwarranted and gave he impression that BAT Malaysia would not be allowed a fair opportunity to sell its products despite complying with all prevailing regulatory requirements.