British American Tobacco Malaysia - Tackling The Black Market Critical For Economic Recovery

Bukit Damansara, 15 June 2020 – British American Tobacco (Malaysia) Berhad (BAT Malaysia, the Group or the Company) concluded its 59th Annual General Meeting (AGM) today and shared its financial performance for the 2019 financial year (FY2019). During the AGM, the Company reaffirmed its commitment to deliver shareholder value, drive commercial growth and invest for sustainable long-term growth.

The AGM also served to illustrate the severe impact of the tobacco black market on the industry as well as BAT Malaysia’s financial performance. This is echoed by statements from various parties commenting on the severity of the black market. As an active advocate against the tobacco black market, BAT Malaysia has urged shareholders to play a more proactive role in speaking up against this black market.

Jonathan Reed, Managing Director of BAT Malaysia said:

“Legal players like us are vital to the Nation’s economic recovery and growth. Simply put, legal businesses contribute valuable tax revenues that can be used towards rebuilding and reigniting the economy post the Covid-19 national crisis.”

“In 2019, despite various initiatives by the government, the tobacco black market continued to grow. This forced the company to aggressively manage our cost base in order to deliver on shareholder value. This is not sustainable in the long term. To effectively stop the black market, more drastic and radical actions are required.”

“We are ready to invest our resources to continue tackling this issue. However, full recovery can only happen if we are able to work hand-in-hand with all relevant parties to implement effective structural reforms to manage the extraordinarily high levels of illegal trade.”

“We encourage and urge the public, including our shareholders, to join in the fight, speak up and support initiatives that will eradicate this issue. We believe that if we band together and bring it to light, the government and policymakers will listen and take definitive action to combat this problem once and for all.”

For the 2020 financial year (FY2020), BAT Malaysia growth strategy will be dependent on the recovery of the legal tobacco market, a regulated nicotine landscape, sensible fiscal policies and a resolution to the affordability issues affecting consumers.

Full-year 2019 financial highlights:

•  Profit from Operations was recorded at RM478 million for FY2019 compared with RM637 million for the previous financial year; a decline of 24.9% (RM159 million).
•  Revenue: declined by 11.1% (RM314 million) when compared to same period last year due to the combination of legal market contraction and downtrading.
•  Operating Expenses was lower, at RM36 million, a 12.7% decline as the Group continued its cost reduction exercise and rationalisation of its cost base by a significant margin.
•  Volume: declined by 11.7% even though the Value for Money (VFM) segment grew by 5.8ppt versus FY2018. The Group’s VFM brand Rothmans, registered a market share growth of 2.0ppt compared with FY2018, closing with an exit market share of 6.7% in the legal segment.
•  Net dividend: 118 per share.

More information on BAT Malaysia’s FY2019 financial results can be found at www.batmalaysia.com or the Company’s Annual Report.

ENDS

For more information on British American Tobacco Malaysia’s financial results, please visit www.batmalaysia.com

About British American Tobacco (Malaysia) Berhad

British American Tobacco (Malaysia) Berhad isthe leading tobacco company inMalaysia. This strong position is built upon a portfolio of high-quality tobacco products designed to meet diverse consumer preferences. Our portfolio includes world- famous brands like DUNHILL, KENT, PETER STUYVESANT, PALL MALL and ROTHMANS. British American Tobacco Malaysia employs almost 500 employees who are involved in a wide spectrum of disciplines, from generating insights, developing brands and making these available on a national level. In addition, we also set leading edge talent development practices as well as ensure a strong foundation of corporate governance and shareholder relations. The company is part of the British American Tobacco group, which is the world’s most international tobacco group and the second largest stock market listed tobacco group by global market share.