BAT nets Sh4 billion in profit
Cigarette manufacturer British American Tobacco (BAT) netted Sh4 billion net profit last year, a 22 per cent jump from Sh3.3 billion in a similar period in 2017.
BAT said the profit jump was mainly buoyed by the sale of semi-processed tobacco and excise-led pricing in Kenya and its export markets. Taxes paid by the cigarette maker, on the other hand, rose marginally by 1.3 per cent following lower excise duty as a result of selling fewer cigarettes in the Kenyan market.
“Taxes from excise duty, VAT, Pay As You Earn and corporation tax increased by Sh233 million to Sh18.3 billion in 2018 as a result of higher corporation tax and VAT due to increased profitability which was partially offset by lower excise duty payments in line with drop in sales volume in Kenya,” said Company Secretary Waeni Ngea in a statement.
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VAT and excise duty reduced from Sh15.79 billion to Sh15.74 billion, while gross revenues shot up from Sh34.4 billion to Sh36.4 billion, earning the company Sh2 billion increase in net revenues.
BAT whose brands include Dunhill, Embassy and Sportsman and also offers Rothmans in the Kenyan market, raised concerns about counterfeits, which it said continued to eat into its market share.
“The performance was dampened by the negative impact of illicit trade in cigarettes in Kenya, the incidence of which rose from 12.4 per cent in December 2017 to 14.1 per cent in December 2018, reducing the sales volume in Kenya,” said Ms Waeni.
During the period under review, the company reduced the use of its overdraft facility, saving on extra finance costs which reduced by 32 per cent to Sh338 million. On costs, BAT invested in portfolio and workplace transformation as well as driving volumes of semi-processed tobacco which increased operational costs by nine per cent to Sh14.5 billion.