KUALA LUMPUR (Feb 6): British American Tobacco (Malaysia) Bhd’s (BAT Malaysia) net profit declined 23.27% to RM47.36 million in the fourth quarter ended Dec 31, 2023 (4QFY2023) from RM61.72 million a year ago (4QFY2022), attributed to significant investments in launching vapour products, resulting in higher operating expenses.

Earnings per share dropped to 16.6 sen from 21.6 sen, and quarterly revenue fell by 17.5% to RM635.86 million from RM770.66 million in the previous corresponding quarter, as indicated in the tobacco group’s filing with Bursa Malaysia on Tuesday.

BAT Malaysia declared a fourth interim dividend of 15 sen per ordinary share, down from 21 sen offered in the same period last year, amounting to RM42.8 million, payable on March 5.

On a quarterly basis, BAT Malaysia’s net profit dropped by 20.44% from RM59.53 million in 3QFY2023, despite a 4.79% increase in revenue to RM606.8 million. This decline in net profit was accompanied by a 24.5% dip in profit from operations, decreasing to RM64 million from RM85 million.

For FY2023 overall, BAT Malaysia’s net profit fell by 25.82% to RM194.75 million from RM262.52 million in FY2022, with revenue decreasing by 11% to RM2.3 billion from RM2.6 billion in FY2022.

In a separate statement, BAT Malaysia’s managing director Nedal Salem said the group’s financial results were within expectations, given the changing market trends. He acknowledged the higher operating costs incurred as part of the group’s deliberate investment in the multi-category business transition.

“Nevertheless, this short-term investment is a deliberate move aimed at growing our position, as we fulfil our purpose to build a better tomorrow,” Nedal said.

Looking forward, he expressed cautious optimism about achieving improved financial performance, while continuing to invest and grow Vuse, the disposable vape product.

Nedal also reiterated BAT Malaysia’s support for the Control of Smoking Products for Public Health Bill 2023, passed during the Parliament session in December 2023. However, he stressed that any regulatory framework developed under this new law must be sensible and evidence-based, to ensure effective enforcement without fuelling the growth of the black market.

“The tobacco black market incidence in Malaysia remained persistently high at 55.6% for 2023. We urge the government to implement the measures announced in the Budget 2024 as soon as possible, to combat the tobacco black market and help recover revenue leakages for the government,” he added.

Shares in BAT Malaysia settled four sen or 0.44% lower at RM9.08 on Tuesday, valuing the group at RM2.59 billion.