British American Tobacco (Malaysia) Berhad (BAT Malaysia) announced its financial results for the fourth quarter of the year ended 31 December 2017.  

On a year-on-year (Y-O-Y) comparison, the company’s revenue and profit from operations were down following the legal market size decline compared to 2016 and the significantly reduced export volumes as a result of the factory closure. 

It was reported that the overall revenue slumps to 20.1 per cent in comparison to 2016.

BAT Malaysia’s gross profit too decreased by 18.8 percent when compared to its previous year.  

BAT Malaysia’s Profit from Operations registered a decline of 29.2 percent whilst their Profit after Tax faced a decline of 31.7 percent when compared to the previous year.  

On a quarter to quarter basis for 2017, BAT Malaysia managed to strengthen its position in the market, registering a rose in market share in the legal market of 0.3 per cent to 53.9 per cent market share in the legal market. 

Dunhill, the flagship brand of BAT Malaysia, grew a +0.7 percent market share to exit 2017 at 37.8 percent when compared to exit 2016.  

Whilst legal market volume declined 3.0 per cent versus the third quarter of 2017, BAT Malaysia’s domestic volume declined at a lower rate of 1.1 per cent.  

BAT Malaysia’s volume recovery trend in the first half of 2017 stagnated in the second half of 2017, mainly due to market dynamics driven by the illegal cigarettes trade and to some extent the growth of lower price segment within the legal market in the fourth quarter of 2017.  

Results were marginally off-set by reductions in the cost base.

In addition, the operating expenses were at four point seven percent, RM19 million, lower than the same period last year which was attributed to overhead savings from cost base transformation initiatives the company has undertaken as well as the lower recharges from related entities and the one-off rental income from the sub- lease of the unutilized space tenanted by the company in the first three quarters of 2017.  

Arising from the Group’s financial performance, the Board of Directors has declared a fourth interim dividend of 43 sen per share.  

“A significant transformation has taken place in BAT Malaysia in the last two years which has ensured that the Company is a much stronger company than before, through a leaner and more efficient operating model, strong brand portfolio to extend our market leadership and with significantly improved capabilities. 

It is today a much more sustainable model to maximize shareholder returns,” commented Erik Stoel, the Managing Director of BAT Malaysia. 

“In spite of a challenging year, we managed to strengthen our position in the legal market via solid share growth at the end of 2017 compared to end of 2016 which was a +1.4 percent share growth to 54.6 percent and stable volume with our flagship brand Dunhill, reinforcing our leadership in the premium segment. 

“We also managed to take leadership in the Aspirational Segment via a solid performance of Peter Stuyvesant that grew to seven point five percent in 2017.”  

“With affordability remaining a key concern for our consumers, the Group decided to enter the value for money segment with Rothmans in October 2017, we believe Rothmans will strengthen our portfolio for the long term.” said Stoel.  

Stoel also commented that he is very concerned with the illegal cigarette trade and that the 2018 Outlook will depend on the improvement of the legal market.

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