HARARE– Cigarette manufacturer, British American Tobacco (BAT) net profit for six months to June went up 60 percent to $7.4 million compared to $4.6 million same period last year as sales shot in a sign of growing consumer confidence.
Revenue for the period went up 19 percent to $19.8 million compared to $16.7 million while gross profit increased 22 percent to $14.57 million from $11.97 million same period last year driven by improved sale volumes and efficiencies in the cost of production.
“The growth in sale was largely attributed to growth across all segments. The Premium Brands recorded a growth of 37percent, the Value for Money Brands attained a 16 percent growth and the Low Value for Money Brands achieved a growth of 285 percent,” finance director Lesley Malunga told an analyst briefing on Thursday.
Marketing expenses increased to support the growth while the Madison cigarette was rebranded to improve market appeal.
Selling and marketing costs were at $2.6 million, an increase of 19 percent compared to the same period last year. However, these were offset by a 37 percent fall in administration expenses to $2.3 million as a result of savings initiatives and once off retrenchment costs incurred in the first half of 2017.
“The increase in marketing costs was attributed to the upsurge of marketing activities during the first half to support the company’s agenda of delivering value to customers,” said Malunga.
Cash generated from operations increased two percent to $11.9 million compared to $11.7 million last year same period with the marginal increase mainly driven by increased profitability, a lower in inventory, improved collections and a significant reduction in creditors.
Earnings per share increased by 64 percent to 36 cents from 22 cents generated last year.
Managing director Clara Mlambo said sales volumes rose 21 percent to 580 million sticks compared to 470 million sticks same period last year largely driven by increased marketing and pricing stability.
Mlambo said the company will continue on its key strategic pillars which are portfolio, route to market, effective cost management, control environment and price stability.
Dividends due to major shareholder BAT PLC that is due for remittance now stands at $12.3 million as Zimbabwe struggles to pay offshore creditors due hard currency shortages. – The Source