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BAT Uganda profits rise sharply on lower operating costs

BAT Uganda profits rise sharply on lower operating costs

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.

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