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SMILING TO THE BANK

BAT shareholders to earn Sh3.5 billion in dividend payout

In Summary

• BAT began the year with a share price of Sh725 at Nairobi Securities Exchange but has since lost close to 29.1 per cent.

• The listed company posted a 22 per cent increase in net profit from Sh3.34 billion earned previous year.

Shareholders of British American Tobacco will receive a 58 per cent increase in dividends.
Shareholders of British American Tobacco will receive a 58 per cent increase in dividends.
Image: FILE

Shareholders of British American Tobacco will receive a 58 per cent increase in dividends in the financial year ending December 2018 compared to the previous year.

BAT managing director Beverly Spencer-Obatoyinbo said shareholders will earn a total dividend of Sh35 per share after their consequent approval, compared to Sh22.50 earned in 2017.

“Shareholders have approved a final dividend of Sh31.50, bringing the total dividend for 2018 to Sh35.00 per share,” Spencer said during the 67th AGM held on Friday.

 
 

The payment will account for 86 per cent of earnings paid as dividends, an increase from the 78 per cent paid in 2017. This means the payout will total to Sh3.51 billion, of Sh4.08 billion net earnings for the year.

The listed company posted a 22 per cent increase in net profit from Sh3.34 billion earned previous year.

BAT’s share rose by 5.48 per cent to Sh544 in close of business on May 9 in anticipation of the announcement. However, the share price dropped by 2.57 per cent yesterday to trade at Sh530.

BAT began the year with a share price of Sh725 at Nairobi Securities Exchange but has since lost close to 29.1 per cent of that price valuation, ranking it 64th on the NSE in terms of year-to-date performance. 

Currently, the company is facing a difficult trading environment with illicit cigarettes and regulations.

Counterfeits cigarettes have acquired 14.1 per cent of the share market at the end of 2018 from 12.4 per cent in the previous year representing Sh2.5 billion denied to Kenya Revenue Authority.

According to Spencer, the fight on illicit trade has been focused on retail space to be a highly fragmented approach.

 

“We have not seen impact yet. If we get to root of manufacturing spots of brands trading illegally then we will be able to attain results before they progress further,” she added.

She also said the requirements contained in the Nairobi City County Tobacco Bill 2018 were a duplicate of the regulations contained Kenya’s Tobacco Control Act 2007 and would only affect the 80,000 people on the supply chain.

Part of the bill calls for retailers to hide the products from view of the general public at the point of sale. Retailers should also display on their counters notice that the products are not for sale to persons below 18 years.

The company is looking to develop three categories of products with a potential of reducing risks in smoking and in the industry.

These include a vapour-based product with nicotine component and battery powered, heat-not-burn tobacco product and oral nicotine product.

The developed products will be evaluated based on consumer demand and commercial viability.

“Research is ongoing. We can’t give the timeline now but the sooner the better,” BAT finance director Sidney Wafula said.

“The traditional cigarettes are evolving. All you need is to watch the space,” Spencer added.