RYAN CHIGOCHE
BAT Zimbabwe slipped into a ZWL$678.6m loss in the six months to June 30, 2022 from a profit position owing to high taxes and inflationary pressures.
In the same period last year, the cigarette manufacturer posted a profit of ZWL$1.4bn.
Administrative expenses and sales and marketing costs increased by 42% to ZWL$724.8m and 65% to ZWL$801m respectively against the prior comparable period.
The group’s net monetary losses also soared 584% to ZWL$2.2bn due to the rapid devaluation of the local currency witnessed in the period.
“Demand was constrained by low disposable incomes as salaries and wages are being eroded by inflation,’’ board chairman Lovemore Manatsa said.
He added that BAT forked out ZWL$3.5bn in taxes as a result of tax increments, also contributing to the loss position.
“…The group’s contribution to the Zimbabwe Revenue Authority in taxes was ZWL$3.5bn for the half year ended 30 June 2022. The key contributors to the increase in the payment of taxes were excise duty and corporate tax driven by the increases in selling prices and currency devaluation,’’ Manatsa said. At a recent budget consultation meeting carried out by the Zimbabwe National Chamber of Commerce, BAT proposed that the excise regime be predictable at a single proposed rate US$16 per 1000 sticks.
According to BAT this will not only remove the ad valorem component, which is subject to manipulation, but will also improve the fiscal benefit.
Despite closing the period on a loss position, the group’s topline increased by 71% to ZWL$6.9bn from ZWL$4bn in the same period last year spurred by price adjustments effected in the period.
Cut rug tobacco export volumes were up 74% in the reported period on the back of increased demand from the golden leaf in the export markets.
Manatsa said the operating environment would most likely remain difficult in the face of rising inflation as well as policy inconsistency.
