Despite a three percent drop in sales volumes during the half year trading period to June 30, 2020 for listed tobacco processor, British American Tobacco (BAT), gains from price adjustments and cut-rag exports earned the company a 22 percent gross profit increase from comparable period last year.
The company sales yielded to the deteriorating economic environment and the effects of Covid-19 pandemic resulting in a 3 percent fall in volumes.
During the period inflation hovered at an average of 737 percent while Covid-19 lockdown restricted product uptake.
But a combination of upward price adjustments and export of cut-rag tobacco saw revenue grow by ZW$68.9 million to reach ZW$410.5 million from ZW$341.6 million realized same period earlier year.
“The increase in revenue was driven by price increases taken during the period as well as revenue generated from the export of cut-rag. These two factors resulted in a gross profit increase of ZW$49.6 million (22%) compared to the same period in 2019,” said BAT.
Selling and marketing costs decreased by ZW$0.2 million (1%) compared to same period in prior year, driven by route to market initiatives aimed at managing the Company’s distribution costs.
Administrative expenses were ZW$17 million (35%) lower than the same period in prior year, driven by the business’s ongoing cost saving initiatives.
Other losses increased by ZW$116.4 million (397%) due to foreign exchange losses on liabilities driven by the devaluation in the Zimbabwe dollar against major trading currencies
“As a result of all of the above, operating profit was higher by ZW$90.6 million (498%) versus the same period in prior year. Net profit attributable to shareholders for the period under review was ZW$73.7 million compared to a net loss of ZW$18.8 million in the same period in prior year, representing a 492% increase,” the company said.
The Premium Brand, Dunhill returned to the market as the Company was later able to import the brand and consequently it recorded a significant increase of 184 percent against the same period in prior year.
In the Aspirational Premium segment, Newbury volumes, declined by 10 percent whilst the Value for Money segment, (Madison and Everest) and Low Value for Money brand (Ascot), recorded a 1 percent increase and 40 percent decrease respectively.
The company did not declare interim dividend to allow reinvestment into the operations of the company amid a bleak outlook.