BAT records deflated volumes as inflation bites
CIGARETTE manufacturer, British American Tobacco (BAT) Zimbabwe, says it witnessed a decline in volume uptake during the 2023 financial year as consumers were strained by unrelenting retail price increases driven by inflation.
In its full-year financials to December 2023, BAT revealed that the Group’s total volume declined by five percent to 1 003 million sticks from 1 054 million sticks reported similar period last year.
According to BAT the group recorded lower volumes and an increased credit defaulting rate from the customers, owing to the harsh economic environment.
BAT Zimbabwe chairman, Lovemore Manatsa, in a statement accompanying financial results for the year to December 2023, said a consistently declining Zimbabwe dollar drove inflation making it tough for consumers.
The hyperinflationary environment is growingly causing planning unease. Analysts say the instability has been caused by money supply growth, further urging the relevant authorities to cap excess liquidity.
“The trading environment for the year ended 31 December 2023 was characterised by hikes in retail prices for basic commodities triggered by rising inflation resulting in pressure on consumer purchasing power.
“Due to the challenging operating environment, the Group and company have recorded lower volumes and an increased credit defaulting rate from the customers. Total volume for the period under review declined by five percent from 1 054 million sticks reported similar period last year to 1 003 million sticks,” said Manatsa.
Nonetheless, the group’s cut rag tobacco export volumes took a 32 percent dip during the period under review compared to the prior year to 282 940 kilogrammes.
Albeit the turbulent economic environment experienced during the year to December 2023, BAT posted a 147 percent growth in revenue ahead of last year to $288 billion.
The revenue earnings were stimulated by the continuous price reviews in line with the currency devaluation and revenue generated from cut rag tobacco and leaf exports.
Consequently, the group’s profit after tax surged 131 percent ahead of the prior year.
PAT for the year ended 31 December 2023 amounted to $55, 4 billion while earnings per share grew to $2 684.85 from $1 163.51 in the prior year.
In the period, selling and marketing costs increased by 109 percent ahead of the same period last year while administrative expenses surged 46 percent against last year.
The cost increases were generally attributed to the significant deflation of the currency which led suppliers to revise their prices and charging more for their goods and services.
In the period, the company saw an 822 percent increase in tax contribution to the Zimbabwe Revenue Authority (Zimra) driven by solid growth in profitability.
In 2022, the cigarette manufacturer’s tax contribution amounted to $12,5 billion.
In the statement accompanying financial results, Manatsa said the taxes were drawn from various tax heads that include Excise Duty, Corporate Tax, Value Added Tax, customs duty, Pay as You Earn, and Withholding Tax.
“The group and company’s contribution to Zimra in the year under review increased from $12,5 billion in 2022 to $115,2 billion for the year ending December 31, 2023. Excise Duty remained unchanged for the year 2023.
Apart from the turbulent economic environment, British American Tobacco Zimbabwe Limited posted an encouraging financial performance for the year to December 2023 delivering 147 percent and 101 percent growth in revenue and profit before tax respectively compared to the same period last year.
BAT indicated that it is confident and on a sound footing to navigate through the oscillating economic environment through the implementation of effective Business Strategies, and brand equity the quality.