KUALA LUMPUR (Oct 30): British American Tobacco (Malaysia) Bhd (BAT Malaysia)(KL:BAT) posted a 14.1% rise in its net profit for the third quarter ended Sept 30, 2024 (3QFY2024), as its operating expenses were significantly reduced by 28.9% year-on-year (y-o-y), given the group’s substantial investment in the launch of its vaping brand, Vuse, in Malaysia last year.

Net profit for 3QFY2024 stood at RM67.91 million, compared with RM59.54 million a year earlier. This resulted in a higher earnings per share of 23.8 sen for 3QFY2024, compared with 20.9 sen for 3QFY2023.

Quarterly revenue rose by a marginal 0.5% to RM609.95 million from RM606.8 million in 3QFY2023, on the back of a 3.3% y-o-y increase in volume, amid a better product mix and increased sales from vapour products.

The group declared a third interim dividend of 22 sen per share, amounting to RM62.8 million, for the financial year ending Dec 31, 2024 (FY2024), payable on Nov 27. This brings BAT Malaysia’s total dividends so far this year to 44 sen per share. It paid total dividends of 63 sen per share in FY2023.

For 9MFY2024, BAT Malaysia’s net profit, however, fell 9% to RM134.18 million from RM147.38 million a year earlier, while revenue slipped 0.8% to RM1.66 billion, from RM1.68 billion in 9MFY2023.

“Our investments to date are showing promising results, as it has led to the group having a better product mix and increase in volume. The group remains optimistic that its performance will continue to strengthen, backed by its multi-category portfolio, as the group aims to continue growing Vuse,” BAT Malaysia managing director Nedal Salem said in a statement on Wednesday.

While it is still too early to evaluate the impact of the Control of Smoking Products for Public Health Act 2024 and its associated regulations (Act 852) on the tobacco industry — set to be implemented in phases throughout 2024 and 2025 — BAT urges the government to maintain open dialogue with industry stakeholders during this transition period, to avoid potential market disruptions.

On Budget 2025, Nedal said the tobacco black market continues to be a significant issue that demands urgent attention, despite the government’s allocation of additional funds to enforcement authorities to combat smuggling activities.

“We are encouraged by the recent intensified enforcement actions from the Royal Malaysian Customs Department in addressing the tobacco black market. While the incidence of tobacco black market has been on a declining trend since 2020, it continues to be at a high of 54.4% in July 2024, and the government needs to continue to focus its attention and resources to address the issue.

“Apart from the proactive work done on the enforcement front to curb the supply, the government should also develop solutions that would address the issues to curb the demand of black-market products,” he added.

Shares of BAT Malaysia gained two sen or 0.28% to close at RM7.21 on Wednesday, giving it a market capitalisation of RM2.06 billion. The stock has fallen 21.72% so far this year.