British American Tobacco #ticker:BAT (BAT) Kenya is seeking new exports markets to compensate for lower consumption of cigarettes in Kenya.
The firm is targeting Djibouti, Madagascar and South Sudan with cigarettes, cut rag tobacco and tobacco-free oral nicotine pouches, Lyft.
Sales from the Kenyan market dropped 13.8 percent to Sh11.6 billion last year on reduced consumption cigarettes in the wake of regulatory curbs and rising prices following additional taxes.
“Our objective is to continue increasing share of exports looking at the current regulatory framework. We expect that over the medium to long term period revenue from the export stream will continue to increase with the investment we are making,” said BAT finance director Philemon Kipkemoi. BAT supplies 15 countries with cigarette and cut rag tobacco from its Kenyan plant.
Export revenues hit Sh13.7 billion last year, representing 54.2 percent of Sh25.3 billion total revenues especially due to growth in volumes to Egypt and Sudan.
The revenues as a percentage of total earnings increased to 54.2 percent last year from 44.3 percent in 2015, while Kenyan sales has dropped to 48.8 percent from 55.7 percent over the period.
The Treasury had raised excise duty on cigarettes by 20 percent in 2019 followed by a further 4.94 percent raise last October in line with the average inflation rate for the year ended June 2020.
“For sustainability, the geographical spread means that when you have softer market you are able to compensate with another and when you have softer performance in domestic sales you can compensate with the export market,’’ Mr Kipkemoi added.