The cigarette manufacturer BAT Kenya has posted a 42% jump in net profit for the year ended December 30, 2020. The company’s net profit hit KSh5.518 Billion at the end of 2020, from KSh3.885 Billion reported in 2019. However, its gross revenue declined slightly to KSh 38.85 billion from KSh39.83 billion a year ago.
BAT says that the year 2020 posed numerous challenges including, competition from illicit products, drop in consumers’ disposable income, and a tough economic environment. The firm’s domestic sales dipped by 24% largely due to the negative effects of covid19 pandemic, excise-led increase in the price of cigarettes, and the prevalence of illicit products in the market.
However, cigarette exports rose and boosted the company’s revenues. Net revenue went up by 5% to KSh25.3 billion. BAT managed to lower its cost of operation by 3% to KSh17.8 billion from KSh18.3 billion in 2019 by undertaking pro-active cost saving measures.
ThE cigarette maker paid the Kenyan government KSh16 billion in the form of excise duty, Value Added Tax (VAT), Pay as You earn (PAYE), and Corporate Tax, 11% lower than it paid in 2019. The company said that illicit cigarette trade denies government over KSh 4 billion in revenue every year.
BAT said it has invested heavily in the Nairobi factory to produce modern oral nicotine pouches. The company aims ‘to reduce the health impact of its business through offering new categories of potentially reduced risk products.’
The cigarette manufacturers will pay shareholders a dividend of KSh41.50 per share on 12th May 2021, subject to shareholders’ approval.
(more to follow)