BAT Kenya has posted a 5.9 per cent rise in net profit in it’s half-year results amidst the disruptions brought by the Covid-19 pandemic.
The cigarette manufacturer grew its net earnings to Sh2.6 billion from Sh2.5 billion in 2019.
Gross revenue however reduced by 13.6 per cent to Sh16.6 billion driven by lower domestic and export revenue reflecting the adverse economic impact of COVID-19 pandemic.
The impact of excise-led price increases at the beginning of the year on consumer affordability and illicit trade incidence in Kenya also affected the firm’s revenue.
Net revenue decreased by 6.7 per cent to Sh10.5 billion reflecting the impact of decline in gross revenue.
“This was partly offset by a decrease in Excise Duty and Value Added Tax (VAT) due to decline in domestic sales volumes and the change in VAT rate in April 2020,” the firm’s financial statement read.
Total cost of operations reduced by 10.1 per cent to Sh6.8 billion reflecting the impact of lower sales volumes, productivity saving initiatives and prudent cost management measures.
Operating margin increased by 2.4 percentage points to 35.6 per cent as a result of the decline in total cost of operations which more than offset the decline in revenue.
Contribution to Government revenues in the form of Excise Duty, Value Added Tax (VAT), Pay As You Earn (PAYE) and Corporation Tax reduced by Sh1.9 billion to Sh7.4 billion in line with lower domestic volumes and changes in tax rates effected by government to mitigate adverse impact of the pandemic.
According to BAT, illicit trade continues to impact industry revenues and deny government in excess of an estimated Sh2.5 billion per annum in revenue.
The company declared an interim dividend of Sh3.5 per share, payable on September 18 to shareholders on the register as of August 21.
The dividend declaration is in spite of BAT failing to generate any new cash balances in the period a factor it attributed to an inverse timing in working capital movements.
