BRITISH American Tobacco (BAT) recorded a 14,6% increase in profit-after tax to $8,5 million during the six-month period ended June this year, buoyed by increased revenue generation.
In June last year, the company posted $7,4 million profit.
Revenue was 48% higher than last year at $ 29,4 million, driven by price increases aimed at containing costs.
BAT chairman Lovemore Manatsa bemoaned the tough economic environment despite posting a positive result.
“The country continued to face economic challenges during the half-year ended June 30, 2019. Critically, shortages of foreign currency and electricity
compromised the efficiency and overall production capacity for those in the manufacturing sector,” Manatsa said.
“The Zimdollar was introduced as the sole tender tradable with other currencies on the interbank foreign exchange market. During the period, the Zimdollar
softened against major currencies, significantly pushing up the cost of production.”
As of yesterday, US$1 was trading at 10,3 against the Zimdollar at the official bank rate.
Manatsa said increased inflation, which was at 176% by end of June, resulted in selling and marketing costs increasing by $1,4 million to $3,9 million
compared to last year.
The main cost drivers were distribution costs, administration expenses which increased by $2,6 million, driven by a once-off distribution of costs and economic
Sales volumes declined by 20% compared to the same period last year, driven by shrinking consumer disposable incomes.
The company said the premium Dunhill brand recorded a decline of 87% compared to the same period last year due to the company’s inability to import the brand
as duties were now required in forex.
The value of money brands, Madison and Everest, declined by 21% and the low value for money brand Ascot also declined by 2%.
The company paid $17,8 million in tax to the revenue authorities..
The appointment of a substantive managing director is expected in the next couple of weeks after the resignation of Clara Mlambo in June.
On the outlook, the company anticipates a challenging remainder of the year.