BAT Malaysia Q1FY2024: Net Profit Decreased by 34.46%, VUSE Performed Well

On May 23, British American Tobacco Malaysia (BAT Malaysia) announced its financial performance for the first quarter of the fiscal year 2024 ending March 31. The report showed that thanks to the new e-cigarette brand Vuse launched in the second half of last year, the company's revenue for the quarter increased by 5.6% to 412 million Malaysian Ringgit (87.3 million USD) compared to the same period last year. However, net profit decreased by 34.46% to 46 million Malaysian Ringgit (9.74 million USD). This decrease was attributed to the company's continued investment in operational costs as it transitions towards diversified business operations, as well as the impact of inflation pressure and rising costs of e-cigarette products.

The highlights of this quarter include:

• The market share of the Value-for-Money brand increased by 0.2% due to the positive performance of Luckies; 
• Market share declined by 0.3% compared to the previous quarter, primarily due to increased competition in the combustible tobacco market and the trend of price reductions. 
• The board of directors has announced a first interim dividend of 10 cents per ordinary share, totaling 28.6 million Ringgit (6.06 million USD), which will be paid to shareholders on June 20, 2024.

The company's general manager, Nedal Salem, stated:

Our Q1 performance reflects the impact of the growing illicit tobacco market and consumers shifting from traditional tobacco to e-cigarettes.

The group remains optimistic that with the improvement of the Malaysian economy, the elasticity of domestic consumer spending and the recovery of exports will enhance its financial performance for the fiscal year 2024. The group is also confident in its strategic transformation through Vuse to offer reduced-risk alternatives, which will drive its growth trajectory and facilitate its transformation into a multi-category business.

Our goal is to build a better tomorrow while also working to reduce the health impact of our business. In order to do so, we believe that the Public Health Smoking Product Control Act (Bill 852) of 2024 is a step in the right direction for the industry. However, the group emphasizes that any regulations introduced must be reasonable and evidence-based to ensure they can be effectively enforced and achieve their intended goals, without fueling the growth of the tobacco or e-cigarette black market.