BAT Zimbabwe recorded a loss amounting to $116.4 million prompted by the devaluation of the local currency against the US dollar amid a sales volume decline attributed to lack of disposable incomes and the Covid-19 lockdown impact.
Presenting financial results for the half-year ended June 30 2020, the company’s acting finance director, Lynette Sambo said foreign exchange losses negatively affected financial performance.
“Other losses increased by 116.4 million (397%) due to foreign exchange losses on liabilities driven by the devaluation in the Zimbabwe dollar against major trading currencies,” she said.
An exchange loss is caused by a change in the exchange rate used such as when an invoice is entered at one rate and paid at another, this will generate an exchange gain or loss.
The fluctuating exchange rates which characterised the markets for the most part of the year exposed several businesses to big losses.
During the period under review, the company’s contribution to the Zimbabwe Revenue Authority (ZIMRA) in taxes increased from $19.9 million in 2019 to $173 million for the period ended 30 June 2020.
The company’s total sales volumes decreased by 3% compared to the same period in the prior year mainly due to shrinking consumer disposable incomes and the impact of the Covid-19 pandemic lockdown which affected the movement of people and their normal way of life.
The Premium Brand, Dunhill returned to the market as the Company was now able to import the brand, and consequently, it recorded a significant increase of 184% versus the same period in the prior year.
In the Aspirational Premium segment, Newbury volumes, declined by 10% whilst the Value for Money segment, (Madison and Everest) and Low Value for Money brand (Ascot), recorded a 1% increase and 40% decrease respectively.
“These movements were driven by shrinking consumer disposable incomes due to the challenging economic environment and the Covid-19 pandemic’s impact on sales,” BAT said in a statement.
Despite the drop in volumes, revenue increased by $68.9 million (20%) from $341.6 million to $410.5 million, when compared to the same period in 2019. The increase in revenue was driven by price increases taken during the period as well as revenue generated from the export of cut-rag.
