British American Tobacco (BAT) Kenya #ticker:BAT has posted a 42 per cent jump in its net profit for the year ended December 2020 on the back of reduced tax bills and operating costs as well as increased exports.
The cigarette maker announced Thursday that its profit after-tax climbed to Sh5.52 billion, rebounding from a 4.9 per cent drop to Sh3.89 billion in 2019.
Net revenue edged up 5.41 per cent to Sh25.34 billion, the Nairobi Securities Exchange-listed firm reported, citing higher exports than domestic sales which helped cut excise duty bills in Kenya.
Domestic sales revenue fell 24 per cent amid economic fallout emanating from the global coronavirus pandemic, resulting in a 2.47 per cent drop in gross revenue to Sh38.85 billion.
“The revenue decline was mitigated by higher export sales which demonstrated continued strategic importance of BAT Kenya hub factory in ensuring a balanced and sustainable business,” said the cigarette maker.
BAT’s earnings were further boosted by the reduction in corporate income tax rate to 25 per cent from 30 per cent and value added tax to 14 per cent from 16 per cent as the government moved to cushion businesses and families from the pandemic knocks between April and December 2020.
The firm’s initiatives to protect profit margins for shareholders amid a Covid-19 economy yielded a 3.07 per cent decline in cost of operations to Sh17.75 billion.
BAT board has proposed a final dividend payment of Sh41.50 per share, bringing the total payout per unit for the year to Sh45, a 34.33 per cent jump from Sh33.50 per share in 2019.
The firm is betting on the new factory for making oral nicotine pouches in Nairobi to continue lifting earnings going forward, despite protestations from public health officials.
Public health officials, led by Health secretary Mutahi Kagwe, and a host of civil society lobbies such as International Institute for Legislative Affairs have resisted the sale of nicotine pouches locally, trading under Lyft brand.
BAT Kenya, however, insists the new products are less harmful to the health of users and are an alternative to cigarettes which have been linked to increased risk of contracting life-threatening diseases such as cancer as well lung and heart diseases.“It is critical that the government develops appropriate and sustainable regulatory framework that maximises the Tobacco Harm Reduction potential of these product categories,” the firm said.
