KUALA LUMPUR (May 29): British American Tobacco (Malaysia) Bhd (BAT Malaysia) posted a net profit of RM40.32 million for the first quarter ended March 31, 2023 (1QFY2023), a decline of 22.95% from RM52.29 million a year earlier, as a result of a lower volume driven by an increase in vapour usage, the tobacco black market and the start of the Muslim fasting month.

Earnings per share dropped to 14.1 sen from 18.3 sen, the group's stock exchange filing showed.

Gross profit margin fell to 22.3% from 24.8% in 1QFY2022, impacted by downtrading and inflationary pressures.

Quarterly revenue dropped 25.18% to RM390.23 million, from RM521.56 million a year ago.

BAT Malaysia declared a first interim dividend of 13 sen per share — lower than the 17 sen paid in the same period last year — amounting to RM37.1 million, payable on June 26.

BAT Malaysia managing director Nedal Salem said the group expects the volatile economic environment to continue impacting its financial performance in the short-term.

“We expect this challenging operating landscape to stretch disposable income, leading to downtrading from legal products to tobacco black market options.

“Nevertheless, in the medium-term, we are confident that economic conditions will improve, whilst the government looks at introducing balanced regulations on vapour and accelerating their interventions to reduce the tobacco black market,” he added.

Salem said BAT Malaysia is also buoyed by the government’s move to exempt nicotine vapour from the Poisons Act 1952 and introduce excise onto nicotine vapour which signals the intent to establish regulations for vapour products.

The group continues to urge the government to establish a balanced science and evidence-based regulatory framework for vapour products.

“The group continues our work with policymakers in the fight against the tobacco black market. With the incidence of black market cigarettes continuing to hover above 55%, we remain firm that this issue is detrimental not only to public health, but also has a significant adverse impact on the country’s economy,” he concluded.

BAT Malaysia shares settled unchanged at RM10.82 on Monday (May 29), giving the group a market capitalisation of RM3.09 billion.