BAT raises red flag over tough operating environment

CLOUDINE MATOLA

British American Tobacco Zimbabwe, a publicly traded cigarette maker, has raised the red flag over the deteriorating  operating environment in Zimbabwe, saying that it is  having an adverse effect on its profit margins, Business Times can report.

Its trading update for the nine months to September 30, 2024, released last week, painted a gloomy picture.

“Zimbabwe’s operating environment continues to be complex and uncertain, with macroeconomic turbulence fuelled by monetary instability and substantial exchange rate distortions adversely impacting business activity,” BAT board chairman, Lovemore Manatsa said

In its trading update for the nine months to September 30, 2024, sales volumes declined by 8% compared to  the same period in 2023 while   cigarette revenue decreased by 37% in the reviewed period.

This was attributed to reduced consumer spending and disposable income.

However, operating costs were reduced by 33% in the reviewed period, driven by cost optimisation initiatives.

Manatsa said BAT Zimbabwe is constantly reviewing its business strategy to guarantee long-term sustainability and value creation for its stakeholders.

“We remain committed to driving growth by simplifying our business model, expanding our consumer centric brand portfolio, and maintaining strong stakeholder engagements.

“We continue a transformation journey anchored on our purpose which is to build A Better TomorrowTM, by reducing the health impact of our business through offering a greater choice of enjoyable and less risky products. As part of our ESG agenda, we are working towards reducing the environmental footprint of our operations through responsible water use, recycling of waste and increasing our energy efficiency, while contributing to local socio-economic development,” Manatsa said.

He also disclosed that in the face of  the country’s economic difficulties, BAT has implemented dual currency billing and route-to-consumer operational overhaul to ensure business continuity and adaptability to changing market conditions, in response to shifting market conditions.

“In response to the economic challenges, we implemented dual currency billing, offering flexibility to

customers and ensuring business continuity.

“We also reviewed our route-to-consumer operations, creating a robust and future fit model that is responsive to evolving consumer and market trends,” Manatsa said.