Tinashe Makichi
HARARE – British American Tobacco Zimbabwe (BATZ) posted a 61 percent jump in profit after tax for the half year to June 30, 2018 to $7,4 million driven by an increase in volume and production efficiencies.
In the same period last year, profit after tax was $4,6 million.
Revenue grew by 19 percent in the period under review to $19,8 million spurred by an increase in volumes compared to $16,6 million realised in the same period last year.
Gross profit for the manufacturer increased 22 percent.
Selling and marketing costs increased 19 percent due to an upsurge in marketing activities to deliver value to consumers.
BATZ finance director Leslie Malunga told an analysts briefing that the company’s administrative expenses declined by 37 percent as a result of cost saving initiatives and once-off retrenchment costs in 2017.
“Other income for the company decreased 56 percent driven by termination of the contract for royalties from BAT Angola,” said Malunga.
Volume for the company increased 21 percent across portfolio compared to half year 2017 attributed to continued activities to support brands.
Inventory for the firm reduced by $1,2 million driven by leaf seasonality while trade and other receivables reduced by $0,4 million spurred on by robust credit control. Trade and other payables increased by $1,9 million due to increase in trapped dividend.
Cash and cash equivalent for the company increased by $6,3 million due to failure to remit dividends.
Net cash generated from operations by the company increased by $0,2 million mainly driven by lower inventory, debtors and decrease in trade payables while net cash utilised in investment activities was down by $0,1million due to lower capex spend.
BATZ managing director Clara Mlambo said the company was looking at strengthening its brands going into the future.
“We are optimistic of the future as a company but we are the opinion that the economic environment will remain challenging as the availability of foreign currency on the market remains challenging,” Mlambo said.
She said there was a project earmarked in the second half of the year which entailed automation of the firm’s sales environment where invoicing would be done real time.
Meanwhile, the cigarette manufacturer contributed a total of $72,8 million towards capital investments which constitutes 3,6 percent of the country’s total capital formation last year, according to a report done on behalf of the company by Econex. This makes the company a significant player in the local market.
The report was done to assess the direct and economic multiplier effects of BATZ on the Zimbabwean economy in bid to establish its economic significance.
Presenting the report, Malunga said the company’s operations contributed a total of $193 million to Zimbabwe’s Gross Domestic Product (GDP) including tax income of $74 million. The company contributed $118, 9 million to Zimbabwe’s GDP.
“The firm contributed a total of $ 113,1 million in value added tax to the Zimbabwean agricultural sector which is 10,7 percent of Zimbabwe’s total value added from the agricultural sector,” Malunga said.
The reported noted that every $1 of sales revenue generated by BATZ, $3,23 of value added tax was contributed to the Zimbabwean economy .
The cigarettes manufacturer also generated exports both up and down the value chain, to the value of $73,6 million which is 1,8 percent of Zimbabwe’s total exports, a source of hard currency for government to sustain the country’s balance of payments
Within Zimbabwe’s tobacco sector, BATZ was the largest payer of excise tax in Zimbabwe, contributing 82 percent in 2017, the report said
Excise duties made the third most substantial contribution to Zimbabwe’s total tax revenue, duty on beer and airtime seven percent and eight percent respectively
On employment contribution, the report highlighted that the company supported a total of 44 768 jobs which is 0,6 percent of Zimbabwe’s total employment
BATZ contributed $52,6 million towards household income while for every $1 million of capital investment, BATZ creates 615 jobs .
Due to the 14 percent purchase of the national tobacco crop by the BAT Group, 32 960 agricultural jobs are sustained across the country while 5 794 retail jobs are sustained as a result of the sale and distribution of tobacco products, the report said.
