BAT Kenya maintains an interim dividend of $ 350 million thanks to increased earnings
Thursday, July 22, 2021
By PATRICK ALUSHULA
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- The cigarette maker’s semi-annual net profit increased by 19 million shillings to reach 2.69 billion shillings as sales volumes grew in the Covid-19 environment.
- The board has approved an interim dividend of Sh3.50 per share amounting to Sh350 million, being the same that was paid in the previous similar period. Payment is scheduled for mid-September.
BAT Kenya #ticker: BAT has maintained an interim dividend of 350 million shillings after net profit for the six months to June increased 0.71 percent, partly slowed by rising operating costs.
The cigarette maker’s semi-annual net profit increased by 19 million shillings to reach 2.69 billion shillings as sales volumes grew in the Covid-19 environment.
The board has approved an interim dividend of Sh3.50 per share amounting to Sh350 million, being the same that was paid in the previous similar period. Payment is scheduled for mid-September.
BAT’s performance came in an environment where many companies have seen revenue declines due to weaker consumer demand, especially for non-priority goods and services.
“Despite the challenging operating environment, increased investment behind our brands and support for our business partners has seen domestic volumes recover. This, coupled with the easing of Covid-19 restrictions, resulted in strong financial performance, ”BAT said.
Gross revenue increased by 22 percent to Sh20.25 billion, and the company attributed this to a recovery in domestic sales volumes, excise-driven price increases, and a sustained boost in exports.
BAT said the growth in domestic sales was partially offset by the five percent increase in excise duties that took place in October last year and the change in value added tax in January 2021.
The tax increases caused BAT to pay Sh7.7 billion in excise duties and VAT, 26.7 percent higher than the Sh6.08 billion paid in a similar prior period.
“This (tax increases) triggered price increases that put additional pressures on consumer affordability, resulting in downgrading to lower-priced brands and a high incidence of illicit trade,” the firm said.
Total operating costs increased 27 percent to Sh8.6 billion driven by higher volumes of cigarettes sold and investment in portfolio transformation.
Financial costs, which are linked to loan servicing, fell to Sh49 million from Sh81 million incurred in the similar prior semester.
BAT is seeking new revenue from nicotine bags in the Kenyan market amid continued resistance from lobbyists who argue that the product, consumed by placing it between the upper lip and gum, has the same impact as the cigarette smoke.
Last month, parliament voted to introduce a tax of 5,000 shillings per kilogram of oral nicotine bags, below the Treasury’s proposal of 1,200 shillings.
BAT says it will continue to engage the government for sustainable regulations to support the commercialization of the Sh2.5 billion nicotine bag factory in Nairobi.
“We welcome the government’s pragmatic approach in defining an appropriate excise framework for oral nicotine bags,” the firm said.