Asian smokers boost BAT’s profits

28 April 2016

British American Tobacco (BAT) just had its annual general meeting in the UK where it celebrated its huge profits for 2015. It made a whopping US$7.2billion selling 663 billion cigarettes sticks worldwide.

It is distressing that a significant portion of BAT’s profits ($2.1billion) came from selling 198 billion sticks to Asians. To maintain its high profits, BAT needs Asians to keep smoking.

Asian smokers boost BAT’s profits table

BAT states its sales in the Asia Pacific region was marginally higher, driven by strong results in Indonesia,Vietnam and Bangladesh, significantly outperforming overall tobacco industry. This means BAT has a lucrative business from smokers in developing countries.

BAT has significant market share among ASEAN countries: Malaysia (62%), Cambodia (40%), Vietnam(30%), Singapore (24%) and Indonesia (7%). Although BAT has only 1% market share in the Philippines, it states the investments it made there has new growth market opportunities which are showing good results.

Meanwhile, BAT Malaysia is whining and making outrageous demands. BAT is grumbling that it recorded net profits of only RM910 million (a reduction of gross profit of 2.2 percent) and blamed it on the tax increase which resulted in lesser sales of cigarettes.

BAT Malaysia had the audacity to ask the government to impose a “3-year moratorium on further excise tax hikes” to “allow the market to stabilize”. BAT and its affiliate organization, CMTM, were spewing inflated data on the smuggling problem to scare the government. However BAT has not taken responsibility that its product cause disease and death. Malaysia has 20,000 tobacco related deaths every year and under the FCTC the government is obligated to increase tax to reduce consumption.

In Cambodia, a research paper published recently provides some clues on BAT’s activities there and why it took many years for Cambodia to finally pass effective tobacco control legislation in 2015.

Watch this space: PMI is scheduled to hold its 2016 Annual shareholders meeting on 4 May.

Previous ASEAN Tobacco Watch updates can be found here