Cigarette manufacturer BAT Kenya has reported a 6.3 percent net profit growth to Sh6.89 billion in the year ended December 2022, the third consecutive year of improved performance.
The company proposes to pay its shareholders a final dividend of Sh52 per share. When added to the Sh5 interim dividend for the six-month to June period, it brings the total payout to Sh57 per share, the highest BAT has paid in its history.
The dividend will be paid on or about June 15 to shareholders on its register by May 26.
The total dividend payout will amount to Sh5.7 billion, up from Sh5.35 billion last year.
The cigarette maker’s results released on Thursday showed the net profit improved from Sh6.48 billion last year as revenue grew.
Total revenue rose by eight percent from Sh25.43 billion to Sh27.38 billion, driven by growth in export volumes and a pricing benefit on domestic and export sales.
BAT’s operating costs increased by nine percent to Sh17.5 billion, with the Nairobi Securities Exchange-listed firm linking this to higher input costs.
“The company delivered a strong performance despite the challenging operating environment characterised by steep and frequent excise tax increases, high inflation, prolonged drought and significant pressure on consumer purchasing power,” said BAT.
The cigarette maker results show that it collected Sh14.87 billion as excise duty and value added tax (VAT) on behalf of the Kenya Revenue Authority (KRA), compared with Sh14.62 billion in the previous year.
The excise duty and VAT, added to pay-as-you earn and corporation tax, took total tax payments to Sh18.5 billion, an increase of three percent on higher excise duty rates and increased profits.
BAT says the excise duty tax rate has, between November 2021 and November last year, increased by 21.3 percent, piling pressure on consumers.
The firm says the tax hikes have seen customers downgrade to lower-priced brands and fuelled increased illicit trade in tax-evaded cigarettes.
BAT explained that third-party research showed illicit trade is now at 26 percent, denying KRA about Sh6.5 billion annually due to a shrinking legitimate market.
“We continue to call for increased resources and enforcement to be deployed by the government against illicit trade in tobacco products,” said BAT.