HARARE – BAT Zimbabwe bounced back into the black on Friday with an after tax profit of $5,3 million for the six months to June, compared to a loss of $1,4 million last year, despite a dip in revenue, driven by an aggressive cost cutting strategy and lower share-based payments to meet the country’s local ownership regulations.
The company reported basic earnings per share of 0,26 cents and declared a dividend of 0,30 cents.
Despite recording a 12% decline in revenue to $20,3 million due to the discontinuation of non-core cut rug sales last year, cost of sales dropped to $6,5 million from $7,1 million last year.
BAT’s hallmark brands maintained sales volumes despite a slowdown in economic activity, the company said.
Administration expenses and marketing costs also declined during the period under review.
BAT Zimbabwe finance director Peter Doona told an analyst briefing that gross profit fell by $2,2 million to $13,8 million because of an increase in depreciation charges and refurbishment costs.
Operating profit increased to $7 million from $4,6 million on reduction of share based payments associated with BAT Zimbabwe’s empowerment programme.
The company has partially complied with indigenisation and empowerment regulations after it surrendered 10% of its issued share capital to an employee share ownership trust.
Doona said BAT expects government to maintain the current levels of excise duty, adding that further adjustment would weaken consumer demand and revenues.
Excise duty levied on cigarettes increased by more than 100% over the last two years; from $7 per 1 000 sticks to $10 in December 2011 to $15 per 1000 cigarettes in December 2012.
BAT managing director Lovemore Manatsa said the company is targeting revenue growth with aggressive promotional strategies in the second half of the year, during which tough trading conditions are expected to persist.
– The Source