BAT Zambia laments illicit cigarette trade

 BAT Zambia laments illicit cigarette trade

BAT Zambia laments illicit cigarette trade.

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Lusaka stock exchange listed British American Tobacco (Zambia) bemoans the increased illicit cigarettes trade in spite of restricted border movement by government authorities.

In its unaudited financial results for the Half Year ended 30 June 2021. The cigarette manufacturer further  laments the effects of the Covid 19 which has affected business environment rendering most business to suffer losses as household incomes continue to be affected by rising food and non food inflation.

Zambia’s inflation has been rising squeezing consumers to the lurch.

“The operating environment continues to be constrained by the prevalence of the COVID-19 pandemic. The adverse effects of the pandemic on Zambia’s business environment and overall economy cannot be overstated,” BAT company secretary Zoe Chisanga Chiliboyi said in a statement accompanying the half year results.

“Over the period under review, a number of businesses suffered significant financial losses, and household incomes were adversely affected by the rising food and non-food inflation. This in turn has resulted in stretched consumer affordability. For the tobacco industry, this contributed to heightened illicit trade in cigarettes, in spite of restricted cross-border movement by government authorities in an effort to curb the spread of the COVID-19 pandemic.”

Despite the challenging operating environment,  the company said there was increased investment behind  brands and support to its trade partners has seen our volumes grow by 14% versus same period last year. 

The Company recorded an increase in gross revenue of 48% amounting to ZMW334.1million during the period under review compared to the ZMW226.2million recorded in same period in 2020. 

The increase was mainly attributed to optimal pricing strategies and an improved product mix.

Net revenue increased by 53% to ZMW223.6million from ZMW146.4 million driven by the increase in gross revenue.

Gross revenue grew to ZMW334.124 from ZMW 226.155

“The total cost of operations increased by 38% to ZMW165.3million reflecting the impact of increased costs of production mainly driven by leaf and wrapping material imports which were impacted by the foreign exchange devaluation of the Kwacha against the United States Dollar,” Chiliboyi said.

Notably, the operating margin increased by 9.8 percentage points to 26.1% as a result of an increase in total revenues.

Profit after tax was ZMW39.904 from a loss of  ZMW26.412 largely attributed to an increase in gross revenue arising from the optimal pricing strategies and improved product mix management  employed at the commencement of the year.

 “The Company continues to be a key and compliant contributor to the Zambian Government’s Treasury through the payment of various taxes key among them; Excise, Corporate Tax, VAT, PAYE and Withholding Taxes. The Company’s contribution to the Zambian Government treasury in various taxes for the period to  30 June 2021 was ZMW114.7million (2020: ZMW80.0 million),” Chiliboyi said.

Fidelity Hamilton Mhlanga

Fidelity Hamilton Mhlanga has been writing finance and business news over the past 5 years. He earned a BSC in Media and Society Studies and Masters of Development Studies from Midlands State University, in Zimbabwe. He follows mining, insurance, banking and energy stories. He is passionate about development and growth.

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