British American Tobacco (BAT) Kenya Limited reported a fall in Half-Year Net Profit by 3.5% to KSh 2.8 billion for the period ended 30th June 2023 from KSh 2.9 billion in HY 2022, citing the adverse impact of new Excise Duty rates and harsh macro-economic factors, for the dip in financial performance.
BAT, the only listed cigarette maker in Kenya, also posted a marginal 4% decline in pre-tax profit to KSh 4 billion at the end of HY2023, compared to KSh 4.2 billion over a similar period in 2022. During the period under review, the company’s net revenue fell by 6.9% to Ksh 13.1 Billion.
A statement from BAT Kenya’s Board of Directors attributed the decline in the financial performance of the firm to a harsh global business environment, inflationary pressure that led to a hike in the price of raw materials as well as geopolitical tensions in its key export destinations.
BAT Kenya also points at a 10% increase in excise duty effective July 1st 2023, contained in this year’s National Budget, from 6% effective October 2022, which hit its sales figures and triggered the emergence of illicit trade in tax-evaded cigarettes.
BAT Kenya revenues affected by activities in Kenya’s cigarette black market
The firm mentions that the cigarette black market in Kenya continues to hurt its revenues and loss of tax to the state estimated at more than KSh 6.5 billion per annum.
A spot check by this publication has revealed the existence of cheaper BAT branded cigarettes being sold in Kenya, from across the border of neighbouring Tanzania.
“It is critical that the Kenya Government redoubles its efforts, including ramping up multi-stakeholder and cross border collaboration to ensure effective enforcement and enhancement of anti-illicit trade regulations, “said BAT Kenya Limited in the statement.
BAT Kenya posted a 4% decline in revenue to KSh 21 billion as the new excise duty led to price hikes in the domestic market. Cash generated from operations increased by 5% to KSh 3.9 billion.
In its outlook, the firm said it is confident of overcoming what it terms as near-term macro-economic challenges as it seeks to deliver sustainable shareholder value.
The BAT Kenya Board of Directors approved an interim dividend of KSh 5.00 per share, in respect of the year ended 31st December 2023. The interim dividend will be payable on or about 22nd September 2023 to shareholders on the register at the close of business on August 18th 2023.
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