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BAT profit after tax slides 45pc

–  Listed cigarette producer, BAT Zimbabwe’s profit-after-tax slid 45 percent to $8, 4 million in the year ended December 31, 2016 from $15, 4 million in the prior year.

This depressed performance was on the back of weakening revenues due declining sales volumes. The group’s revenue declined by 25 percent to $34 million from $45, 2 million driven by decrease in sales volumes.

Gross profit declined by 24 percent mainly driven by the decline in revenue. Giving a briefing of the company’s full year results this morning, finance director Mr Lucas Fransisco attributed the weaker performance to low demand during the period.

“Volume decline was attributable to weak consumer demand due to weak macro-economic performance,” he said.

He however noted that Dunhill volume grew 7, 2 percent compared to the previous year was “off a small but growing consumer base.”

Manage said selling and marketing costs rose 9 percent due to marketing activities the company ran to defend sales volumes.

Administrative expenses declined by 3 percent as a result of the annualized benefits of the staff rationalization that happened in 2015 and reduction on management fees

Other Income decreased 42 percent driven by 2015 once off property sale. And operating profit decreased by 43 percent. The group said inventory reduced by $1,2 million driven by change in leaf purchasing cycle, while trade and other receivables reduced by $3,6 million impacted by the property sales proceeds which were received in 2016 and improved debtors collections.

Net cash generated from operations decreased by $1,9 million, a development management attributed to low profitability which was offset by a decrease in working capital driven by lower stocks, debtors and increase in payables.

The group said net cash utilised in investment activities declined by $0,4 million due to lower CAPEX. Going forward, the group’s managing director Ms Clara Mlambo said the business will keep focusing on its key strategic leadership pillars to grow volumes and deliver value in the current financial year.

She said BAT Zimbabwe supports Government’s position to maintain excise, at the current rate as this allows pricing stability and volume recovery.

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