NAIROBI, Kenya, Feb 20 – Cigarette Manufacturer British American Tobacco has announced a 41 percent growth in profit for the year ended December 31, 2020 to Sh5.5 billion from the Sh3.9 billion it recorded during the same period in 2019.
The group’s company secretary Kathryne Maundu through a statement said the high earnings reflect the increase in net revenue, reduction in costs, and the reduction in the corporation tax rate in April 2020.
According to BAT, cost operations decreased by three percent to Sh17.8 billion mainly due to pro-active cost-saving initiatives undertaken to cushion business profitability from the impact of the COVID-19 pandemic.
“Operating margin increased by 6 percent points to 30percent in line with net revenue growth and the reduction in costs,” said Maundu.
However, BAT’s gross revenue reduced by 2 percent to Sh38.8 billion which was greatly influenced by a 24 percent decline in domestic sales reflecting the harsh economic condition occasioned by the outbreak of the coronavirus disease.
“The impact of the excise-led price increases on consumer affordability and illicit trade in Kenya,” the firm said in a statement.
This was however covered through higher export sales in the period under review.
At the same time, the firm saw its net revenue up by 5percent to Sh25.3 billion driven by higher export revenues and lower Excise Duty and Value Added Tax which BAT says reflects the impact of the decline in domestic sales volumes and the reduction in VAT rate in April 2020 as part of government’s COVID-19 relief measures.
BAT’s board of directors has proposed a final dividend of Sh41.50 per share to be recommended for approval by shareholders at the Annual General Meeting to be held on May 12 2021.
The final dividend declaration will add to initial Sh3.50 interim dividend payout bringing the total dividend to Sh45 per share for the year.