BAT Zimbabwe holds on to $8m foreign dividends
BAT ZIMBABWE, which is holding on to $8 million (R104.06m) in accrued foreign shareholders dividends, said yesterday that consumers in Zimbabwe had downgraded to cheaper products, although the cigarette company lifted interim dividends to 22 cents per share.
Against the backdrop of a difficult operating environment, which the company’s managing director said would worsen in the 2017 second half period, BAT Zimbabwe had lifted profits for the June 2017 half-year period to $4.6m compared with $3.6m in the previous contrasting period.
Earnings per share for the period increased from 18c to 22c in line with headline earnings per share that surged with a similar margin to the same amount.
Clara Mlambo, BAT Zimbabwe’s managing director, told an analysts briefing yesterday: “We believe the results are uplifting, but trading conditions remain challenging and we don’t expect the trading conditions to change particularly on foreign currency shortages.
“We have seen the bond notes drying up and this has an impact on consumers ability to purchase,” Mlambo said.
Zimbabwe is battling a liquidity crisis that has seen companies delay debt payments, fail to pay foreign shareholders and delay payments to foreign suppliers.
BAT Zimbabwe has been hit on foreign shareholders and foreign suppliers payments fronts. According to finance director, Lucas Francisco, the group had accrued $8m in delayed dividend payments to foreign shareholders. This has seen the company’s cash and cash equivalents for the period mount by as much as $7m in the half year period under review to about $19.3m.
Other companies that have been unable to pay foreign shareholders on time include Delta Corporation, the associate unit of Anheuser-Busch InBev.
Econet Wireless had to carry out an offshore rights issue to raise funds to settle a maturing debt facility.
BAT said, however, that it continued to engage suppliers and banks in Zimbabwe to address the current liquidity crisis in the country. Bond notes introduced in November last year have failed to stem the tide of liquidity shortages on the market.
“Foreign currency is a challenge and the finance team has been negotiating with foreign suppliers. We are also negotiating with the banks and in H1 we have been successful in terms of engaging the banks, but we have not been able to remit dividends to our foreign shareholders,” Francisco said.
Revenue generation for the interim period to June 2017 grew by a marginal 0.5 percent.
Volumes for the premium category brands such as Dunhill “declined moderately” compounded by “affordability challenges” faced by consumers.
“Cash generated from operations increased by 23 percent to $9.9m compared to $8m achieved in the same period last year. The increase was mainly driven by increased profitability, improved collections, delays in payments to foreign suppliers and a decrease on stock holdings,” chairperson of BAT Zimbabwe, Lovemore Manatsa, said.
Although it has been facing difficulties in Zimbabwe, BAT has paid as much as $14.1m in taxes and statutory payments to the government during the first half of the current year.