BAT half year rev­enue slides 9% on cig­a­rette price cuts

Zambian Business Times - - FRONT PAGE -

BRI­TISH Amer­i­can To­bacco posted a 9% de­cline in H1: 2018 top line rev­enue of K114.8mil­lion (about USD11.5 mil­lion) for the pe­riod Jan­uary to June 2018, down from K126.4 mil­lion (about USD12.6 mil­lion) same pe­riod a year ago.

In a se­cu­ri­ties ex­change reg­u­la­tory note, LuSE listed BAT at­trib­uted the rev­enue slide to price re­duc­tions that man­age­ment ef­fected to drive sales vol­umes higher. BAT stated that it recorded a 58% vol­ume growth in the pe­riod.

The com­pany stated that it had com­menced lo­cal man­u­fac­tur­ing of some of its prod­ucts at the Lusaka South Multi-Fa­cil­ity Eco­nomic Zone -LSMFEZ which the com­pany con­firmed would be of­fi­cially opened in Q4:2018.

The com­pany's half year fi­nan­cial state­ment also shows a drop in cash gen­er­ated from op­er­at­ing ac­tiv­i­ties by 43% as well as a fur­ther drop in tax con­tri­bu­tion to the Zam­bia Rev­enue Au­thor­ity -ZRA by 47%. The drop in tax con­tri­bu­tion was at­trib­uted to the tax hol­i­day that has been granted to the com­pany dur­ing its cur­rent MFEZ in­vest­ment pe­riod.

The to­bacco in­dus­try has seen no­table in­vest­ment in lo­cal man­u­fac­tur­ing fa­cil­i­ties with BAT in­vest­ing about US$15 mil­lion while com­peti­tors like Roland Im­pe­rial To­bacco have also com­menced the ex­pan­sion of their lo­cal man­u­fac­tur­ing plants.

BAT will now be able to cut down on im­port­ing cig­a­rettes and other to­bacco prod­ucts once the plant is fully launched. This is ex­pected to lead to forex saves on the Zambian forex mar­ket and na­tional trea­sury. The move is also ex­pected to boost both de­mand for lo­cally pro­duced to­bacco from com­mer­cial and emerg­ing farm­ers.

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