BAT Kenya 2024 Financial Performance: A Deep Dive into Challenges and Opportunities

Feb 26, 2025

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British American Tobacco (BAT) Kenya has released its 2024 full-year financial results, showcasing resilience in the face of multiple macroeconomic and regulatory challenges. While revenue remained stable, profitability suffered due to rising finance costs and forex-related losses. In this article, we dissect the numbers, analyze the business environment, and evaluate BAT Kenya’s investment prospects.

Financial Highlights

1. Key Performance Metrics

Revenue: KShs 25.7B (+1% YoY)
Operating Profit: KShs 7.3B (-8% YoY)
Profit Before Tax (PBT): KShs 6.5B (-19% YoY)
Net Profit: KShs 4.48B (-19% YoY)
Net Profit Margin: 17.4% (down from 21.8% in 2023)
Finance Costs: KShs 0.83B (+955% YoY)
Dividend per Share: KShs 50.00 (yield: 13%)

Despite strong cash flow generation (KShs 10.4B, +23%), BAT Kenya’s profitability suffered due to higher finance costs and forex losses.

What Drove the Decline in Profitability?

1. Foreign Exchange Losses & Rising Finance Costs

The 20% appreciation of the Kenya Shilling (KES) against the USD in Q1 2024 had a negative impact on export revenue, leading to foreign exchange losses. This caused a sharp rise in finance costs by 955%, significantly impacting net profitability.

2. Illicit Trade & Regulatory Pressures

Illicit cigarettes now account for 37% of Kenya’s market. This deprives BAT Kenya of market share and reduces the government’s tax revenues by an estimated KShs 9B annually. Additionally, the regulatory uncertainty surrounding modern oral nicotine pouches led to BAT Kenya suspending domestic sales and selling off related machinery to protect shareholder value.

3. Changing Consumer Trends & Cost Pressures

Inflation led to downtrading—consumers shifting to lower-priced brands.
Cost of operations increased 4% YoY, reflecting a tough business environment.
BAT Kenya implemented cost-saving initiatives, but margin pressure persisted.

Cash Flow & Dividend Stability

One positive highlight in BAT Kenya’s results is its strong cash flow generation, which increased 23% YoY to KShs 10.4B. This enabled the company to maintain a solid dividend payout of KShs 50 per share (13% dividend yield), reaffirming its commitment to shareholder value. This high dividend payout is higher than its Earnings per Share (KES 44.83) so sustainability of such generosity to shareholders will be tested over time.

What Should Investors Watch in 2025?

KES/USD Stability: Continued forex volatility could impact export earnings.
Illicit Trade Action: Government intervention is critical for revenue recovery.
Regulatory Developments: BAT Kenya is engaging regulators to reintroduce oral nicotine products.

Conclusion

BAT Kenya’s 2024 performance reflects resilience despite headwinds. While profits declined, strong cash flow generation and dividends remain key strengths. Investors should keep an eye on forex trends, regulatory shifts, and market stability in 2025

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