British American Tobacco Bangladesh reported a sharp downturn in first-quarter FY2025-26 performance as higher tobacco taxes, consumer downtrading, and rising competition from illicit cigarettes weighed heavily on sales. Domestic cigarette volumes fell 14% year-on-year, dragging gross revenue down 10.7% and net revenue down 21% as the effective tax burden climbed to 84.1%.
Industry estimates suggest illicit cigarettes now capture up to 18% of the market, intensifying pressure on compliant manufacturers. While gross margin improved to 56% on lower cost of sales, operating expenses surged more than 40%, and operating cash outflow widened amid rising inventories and higher short-term borrowing. Non-core revenue streams offered little support, with cigarette exports remaining at zero for a third straight quarter and leaf export volumes falling sharply.
