BAT profit hits Sh4bn on sales, cost-cutting

Cigarette manufacturer BAT Kenya #ticker:BAT recorded a 22.4 percent net profit growth in the year ended December on the back of higher sales and reduced costs.

The Nairobi Securities Exchange-listed firm’s net earnings in the review period stood at Sh4 billion compared to Sh3.3 billion the previous year.

This came as net sales increased 11.1 percent to Sh20.7 billion in what the company attributed to strong demand, especially in the export markets.

BAT declared a final dividend of Sh31.5 per share, raising its total payout to Sh35 per share. The final dividend will be paid on May 10 to shareholders on record as of March 14.

The payout marks a 34.6 percent jump from the Sh2.6 billion or Sh26 per share distributed for the previous year.

“The company performed well in Kenya and across its export markets to deliver a strong set of results in 2018,” BAT said in a statement.

Besides cigarettes, the company also exports semi-processed (cut rag) tobacco to countries like Egypt.

BAT said that its performance would have been even stronger were it not for an increase in the sale of counterfeit cigarettes in the local market.

“However, the performance was dampened by the negative impact of illicit trade in cigarettes in Kenya, the incidence of which rose from 12.4 percent in December 2017 to 14.1 percent in December 2018 — reducing sales and denying government much needed revenue,” the company said.

BAT’s performance also benefited from 31.5 percent drop in finance cost to Sh338 million from Sh494 million as both long and short-term debt declined.

The dividend declared for the review period represents a payout of 85.6 percent of the net earnings.