• British American Tobacco (BAT) reported a 39.6 percent decrease in its net profit to RM433 million for 9M16, as the excise duty-led price increase resulted in the overall volume reduction and escalating cost pressures.
  • For the third quarter, BAT experienced lower domestic and duty free volumes, and contract manufacturing business, which declined by 30 percent and 41.9 percent respectively.
  • BAT also recorded the impact of one-off restructuring expenses amounting to RM86 million in 2Q16 in relation to the winding down of its existing factory operations announced in March.

Significance: The group expects FY16 profit from operations to be lower than the previous year. BAT remains highly concerned with legal volumes continuing to be impacted by the rampant illegal cigarette trade in the market, a consequence of the unprecedented huge excise increase in November 2015.