Listed tobacco processing firm, British American Tobacco (BAT) says its volumes for the first quarter (Q1) 2022 increased substantially compared to same period last year owing to increased export of cut rag tobacco and leaf.
Global trade for the golden leaf declined since the start of the COVID-19 and got even worse last year with the shortage of shipping containers disrupting international supply chains.
In its Q1 trading update, BAT said the deteriorating economic environment weakened consumer appetite for cigarettes on the domestic market.
“The Company’s volumes from sale of cigarettes were relatively flat as compared to the same period last year on the backdrop of shrinkage of consumer disposable income,” said BAT chairperson, Lovemore Manatsa.
Additionally, the cigarette excise ad valorem regime which was changed from 20 percent to 25 percent with effect from 1 January 2022 worsened challenges for the company.
The value-for-money brands, Lucky Strike and Madison, contributed 52 percent and 38 percent of the volume performance respectively.
“Export volumes of leaf and cut rag tobacco were up by 163% in the three months period under review compared to prior year due to increased demand of leaf from our export markets,” said Manatsa.
BAT also said the volume growth coupled with the pricing review done during the period, resulted in the Company recording a growth in net turnover of 147 percent in historical terms, compared to the same period prior year.
With continued conflict in Ukraine which has sparked inflation globally, coupled with exchange rate volatility locally, the company said it anticipates an increase in the cost of production.
