By Edward Mukaro
PRICE increases and revenue generated through export of cut-rag tobacco has enabled the country’s leading cigarette manufacturing concern, British America Tobacco (BAT) to post a 2 percent (%) gross profit increase to ZW$18 million, for the trading period ending 31 December 2020, compared to the prior year.
The positive financial trading period however came amidst the various challenges posed by the COVID- 19 pandemic, which affected disposable incomes.
As a result sales volumes were affected as the firm recorded a decline of 12%.
Said BAT, “Despite the drop in volumes, revenue increased by ZW$597 million or up by 40% when compared to the prior year, driven by the price increases as well as revenue generated from the export of cut-rag tobacco.
“The two revenue-generating streams resulted in I gross profit increase.”
However, the gross profit increase came despite the stark decline in sales volumes.
“…Sales volumes declined by 12% for a year under review compared to the prior year.
“The negative results were recorded inspite of the return of imported Premium Brand, Dunhill, back in the market with an increase in volume growth of 1.481% compared to the prior year,” said BAT.
In the Aspirational Premium segment (Dunhill Kingsgate and Dunhill Newbury), volumes declined by 45%. Value for money segment, (Madison and Everest) and Low Value for Money brand (ascot), volumes declined by 8% and 47% respectively.
Shrining consumer disposable incomes due to the challenging economic environment and the COVID- 19 pandemic’s impact on sales drove the decline in sales volumes.
Despite the increase in gross profit, the BAT board did not declare a Dividend, saying, “As a result of the economic challenges, the Board has not declared a dividend for the year ended 31 December 2020 to allow for reinvestment into the operations of the company.”
The company noted that contribution to the Zimbabwe Revenue Authority (ZIMRA) in taxes increased from ZW$101 million in 2019 to ZW$894 million for the year ended 31 December 2020.
Key contributors to the increase in tax were Excise Duty and Corporate Tax driven by the increases in the selling price of products and the profit generated before taxation.
By Edward Mukaro