British American Tobacco Uganda reported its strongest growth in profits in three years as cost-cutting measures in response to the Covid-19 pandemic more than made up for the hit to the cigarette distributor’s sales.
Uganda’s dominant cigarette distributor said profit after tax rose 27.3% year on year to Shs19.9bn in 2020, up from Shs15.6bn a year earlier . It is the company’s fastest increase in net profit since 2017 when it registered growth of 54.6% from the previous year.
The company’s earnings per share – its net profit divided by the total number of common shares it has outstanding – rose to Shs407 from Shs320 in 2019.
Total revenue increased to Shs79.2bn from Shs75.4bn in 2019, a jump of 5%, on a reduction in excise duty and value added tax and driven by “an improved product mix”, according to an earnings announcement released by BAT Uganda. The indirect taxes reduced by 6.8% compared to 2019’s 5.4% increase. Gross sales fell 1.4% year on year to Shs162bn due to lower sales “reflecting the impact of the Covid-19 pandemic.”
Operating income rose 29.9% year on year to Shs29bn, boosted by a reduction in operating costs. Operating costs declined by 5.5% from the previous year to Shs50bn “in line with lower sales volumes as well as pragmatic cost saving initiatives undertaken to cushion busines profitability from the impact of the Covid-19 pandemic on revenue,” BAT Uganda said.
Pre-tax profit for the year increased to Shs29.2bn, up from Shs22.4bn the previous year, a gain of 30%.
BAT Uganda said it will pay a dividend of Shs406 per ordinary share for 2020 subject to approval by shareholders at its annual general meeting on 27 May.