KUALA LUMPUR (July 25): British American Tobacco (Malaysia) Bhd (BAT Malaysia)’s net profit fell 32% to RM77.23 million for the second quarter ended June 30, 2019, from RM113.72 million a year earlier, reflecting an overall decline in legal volumes as well as higher company expenses.
Earnings per share fell to 26.7 sen from 38.6 sen, the group said in a filing with Bursa Malaysia.
Revenue was also lower by 6% at RM640.81 million from RM679.15 million previously.
The group said operating expenses increased by 19.5% compared with the previous quarter mainly due to higher marketing spend in new segments.
Profit from operations had registered a decrease of 10.9% compared with the previous quarter and down by 19.4% compared with the same period last year which was due to phasing of operating expenses and the group’s investment into fighting high levels of illegal trade.
Despite external pressures, BAT Malaysia outperformed the legal industry during 2Q, marking a 3.6% growth versus the preceding quarter.
The group has declared a second interim dividend of 26 sen per share, compared with 35 sen a year ago.
“The results of the last quarter are a reflection of the escalated efforts management has undertaken in order to defend its position vigorously, preserve long-term shareholder value and fight against a dynamic marketplace under siege from continued high levels of contraband cigarettes,” said Erik Stoel, managing director of BAT Malaysia
“If the industry continues to be pressured without any meaningful interventions, we will have to review the level of our investment in Malaysia,” he said.
For the first half of the year, net profit fell 21% to RM165.15 million from RM209.61 million while revenue fell 4% to RM1.26 billion versus RM1.32 billion previously.
BAT’s share price closed 48 sen or 1.6% lower at RM29.60, for a market capitalisation of RM8.45 billion.