Liquidity squeeze douses BAT performance
LIVINGSTONE MARUFU
Listed cigarette maker, British American Tobacco (BAT) Zimbabwe says the company recorded reduced production figures during full year 2022 amid tight ZWL$ liquidity in the market.
In his statement accompanying the financial results for the year ended December 31 2022, BAT Zimbabwe chairman Lovemore Manatsa (pictured) said besides the liquidity crunch, the economy also experienced increased power shortages and reduced disposable income.
“The group recorded 1.054bn sticks for the year under review, compared to 1.130bn sticks the previous year ending (ending 2021), resulting in negative volume performance for the period.
“This volume drop was driven by a shortage of RTGS in the market which made it difficult for customers to purchase our products. Further, the group established that the smart pricing mechanism implemented by the company resulted in higher pricing when compared to competitor trade prices in US$,” Manatsa said.
He said export volumes of cut-rag tobacco declined by 43% during the period under review compared to prior year as a result of decreased export market demand.
The company recorded a 4% increase in profit after tax to ZWL$4.99bn in 2022 from ZWL$4.81bn during the same period in 2021 due to increase in product prices.
BAT recorded a 50% increase in revenue to ZWL$24.3bn compared to the previous year.
This was driven by price reviews and revenue generated from cut-rag tobacco and leaf export sales. These two income streams generated a gross profit of ZWL$18.3bn which represents a 74% growth when compared to the year prior.
The group’s earnings per share increased to ZWL$287.43 from ZWL$277.11 in the year prior.
Manatsa said the central bank is now finalising the appropriate instrument(s) to facilitate settlement of the registered blocked funds.
Resultantly, the successful registration of blocked funds, which were listed as approved blocked funds and the management has continued to account for the outstanding blocked funds at a rate of US$1: ZWL$1.
The Group’s contribution to the Treasury through various tax heads including excise duty, corporate tax, value added tax, custom duties, pay as you earn and withholding tax remain substantial.
BAT Zimbabwe’s contribution to the Zimbabwe Revenue Authority in the year under review, increased to ZWL$17.5bn for the year ending December 31 2022 from ZWL$11bn in 2021.
Key contributors of the group’s increased tax payments were excise duty, corporate tax and pay as you earn, driven by increases in the selling price of products and profit generated before taxation and rising inflation.
In view of the profit recorded for the period under review, the board proposes the declaration of a final dividend of ZWL$88.35 per share.
In the outlook, the board is confident that the group is in a good position to navigate these erratic economic conditions through the implementation of effective business strategies, the equity of brands and the quality of the people.
The group expects to continue to deliver growth and value for its shareholders.
