BAT raises cigarette prices by RM1.50

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KUALA LUMPUR: British American Tobacco (Malaysia) Bhd (BAT Malaysia) has announced that it will increase prices of all its cigarette brands from today, after the government raised the excise duty on tobacco products last Saturday.

According to a price list sighted by The Edge Financial Daily yesterday, the country’s largest tobacco company by market share is raising the price of a pack of 20s by RM1.50 to RM13.50 for Dunhill, Benson & Hedges and Kent.

The price of Lucky Strike and Rothmans brands will also increase to RM14 a pack, while the Peter Stuyvesant and Pall Mall cigarette range will increase by RM1.50 as well to RM12 a pack.

According to industry sources, BAT Malaysia’s latest move follows the government’s hike in excise duty by three sen per stick last Saturday.

It is understood that prices of JT International Bhd’s and Philip Morris (Malaysia) Sdn Bhd’s cigarettes remain unchanged.

To recap, BAT raised selling prices twice in 2013 (June and September) due to cost pressure to fully offset the incremental excise duty.

It had on Sept 8 this year announced a RM1 hike in its cigarette prices, but had to revert to its old prices two weeks later “in order to remain competitive”.

“Our last price increase was to alleviate mounting inflationary cost pressure amplified by progressive loss of legal domestic volumes over the years to illegal trade, decline in contract manufacturing volume and an overall very competitive trade and distribution channels,” BAT managing director Stefano Clini had said then.

“However, in order to remain competitive, we have decided to revert to our prices before Sept 8,” he added.

BAT Malaysia saw its first nine months ended Sept 30, 2014 (9MFY14) revenue grow 4.9% year-on-year led by higher average selling prices.

However, sales volume for 9MFY14 fell 6.2% compared with the year-ago period.

Shares in BAT Malaysia closed down 2.19% to RM67.86 yesterday, giving it a market capitalisation of RM19.38 billion.

 

This article first appeared in The Edge Financial Daily, on November 5, 2014.