British American Tobacco (BAT) Holdings posted strong revenue gains during first half of 2019 ending June 30 in the face of dwindling volume sales attributed to weaker product uptake as a negative macro- economic environment weighed heavily on business.
Revenues went 48 percent up to ZWL$ 29.458 million during the period as compared to ZWL$ 19.855 million recorded during the corresponding period last year, a ZWL$ 9.6 million positive variance.
However, despite these gains, volume sales took a drastic slump, of 20 percent as compared to the same period last year.
The company however managed to sustain a difficult first half by increasing prices.
“(Revenue) was driven by price increases targeted at containing an increase in costs. This resulted in a gross profit increases of ZWL$ 8.9 million which is 61 percent up compared to the same period last year driven by the positive impact from raw materials sourced at lower prices,” Group Chairman, Lovemore Manatsa said.
Due to foreign currency shortages, the company’s premium brand, Dunhill recorded a decline in sales of 87 percent as compared to last year’s first six months as the company was unable to raise enough foreign currency to pay duty to import the product.
The Madison and Everest brands sales also dipped 21 percent compared to corresponding period last year while its value for money brand, Ascot also declined by 2 percent.
With month-on-month inflation soaring to 175.6 percent in June, the company also saw its operating costs surge.
“Increased inflation resulted in selling and marketing costs increasing by ZWL$ 1.4 million (54%) to ZWL$ 3.9 million compared to the same period last year. The main cost drivers were distribution costs. Other losses increased by ZWL$3.8 million driven by foreign currency denominated liabilities exchange losses,” the Group said in a statement.
Resultantly, the Group’s tax contribution to Treasury decreased.
“The company’s contribution to the Zimbabwe Revenue Authority in taxes, which include Excise Duty, Corporate Income Tax, Value Added Tax, Pay As You Earn and Withholding tax, decreased by 11 percent from ZWL$ 19.9 million contributed for the period ended 30 June 2018, to ZWL$ 17.8 million for the period ending 30 June 2019,” the Group said.
As a result of the prevailing economic environment during the period under review, the board did not declared an interim dividend to allow reinvestment in the operations of the company.
