Illicit trade, higher costs weigh on BAT

PETALING JAYA: British American Tobacco (M) Bhd has recorded a net loss of RM35.1mil for the first quarter ended March 31, 2026 (1Q26) compared to a net profit of RM23.3mil in 1Q25, as illegal cigarettes continue to dominate the market with a 56.7% share.

Revenue for the quarter halved to RM160.3mil reflecting lower volumes amid a more challenging operating environment.

The company’s operating expenses increased by 74.7%, driven primarily by one off regulatory implementation costs and restructuring-related costs.

BAT Malaysia managing director Nedal Salem said in a statement that the company’s 1Q26 financial performance reflects a transitional period as it implements several key internal changes to strengthen and optimise a long-term operating model and competitiveness.

“The increase in operating costs during the quarter was a result of the planned investments related to regulatory compliance requirements, in particular the implementation of the retail display ban, and the execution of our new route-to-market model, which we believe will deliver a more agile and efficient business moving forward,” he said.

The company further noted in a stock exchange filing that on a year-to-date basis, the legal combustible segment recorded a 4.5% decline in volume, reflecting ongoing structural pressures on the legal tobacco market.

This was accompanied by a 2.3-percentage-point rise in illicit cigarette incidence, the first increase in illicit cigarette incidence since 2021.