KENYA – Cigarette manufacturer BAT Kenya has posted a 42% jump in net profit for the year ended December 30, 2020.

The company’s net profit hit US$50.21 million at the end of 2020, from US$35.46 million reported in 2019.

However, the Nairobi Securities Exchange listed firm saw its gross revenue decline slightly to US$354.6 million from US$363.6 million in 2019.

BAT says that the year 2020 posed numerous challenges including, competition from illicit products, drop in consumers’ disposable income, and a tough economic environment.

The firm’s domestic sales in Kenya dipped by 24% largely due to the negative effects of Covid-19 pandemic, excise-led increase in the price of cigarettes, and the prevalence of illicit products in the market.

The decline in local sales was compensated by a rise in cigarette exports that boosted the company’s revenues.

“Domestic sales in Kenya dipped by 24% largely due to the negative effects of Covid-19 pandemic, excise-led increase in the price of cigarettes, and the prevalence of illicit products in the market”

Net revenue went up by 5% to US$230.9 million.

BAT managed to lower its operational cost by 3% to US$162.3 million from US$167 million in 2019 by undertaking pro-active cost saving measures.

Th cigarette maker paid the Kenyan government US$146.1 million in the form of excise duty, Value Added Tax (VAT), Pay as You earn (PAYE), and Corporate Tax, 11% lower than it paid in 2019.

The company said that illicit cigarette trade denies government over US$36.5 million in revenue every year.

BAT said it has invested heavily in the Nairobi factory to produce modern oral nicotine pouches which it says aims ‘to reduce the health impact of its business through offering new categories of potentially reduced risk products.’

The cigarette manufacturers will pay shareholders a dividend of US$0,38 per share on 12th May 2021, subject to shareholders’ approval.

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