Increase in exports lifts BAT net profit by 16pc to Sh4.3bn
What you need to know:
- The cigarette maker announced Sh4.3 billion in profit after tax in the period under review up from Sh3.7 billion it posted over a similar period in 2013 with gross turnover jumping 7 per cent.
- BAT exports its products to over 15 countries including Uganda, Rwanda, Tanzania, Madagascar, Mauritius and nations in the Horn of Africa.
- The tobacco industry has had to deal with unpredictable tax regime because it is one of government’s main targets when raising revenue.
A rebound in British American Tobacco’s export revenues and a drop in financing cost helped the firm register a 16 per cent growth in its net earnings for the period ending December 2014.
The cigarette maker realised Sh9.4 billion from exports last year, regaining from a three-year downward spiral since its record high of Sh11.4 billion in 2011.
Export revenues touched their lowest point at Sh9.3 billion in 2013, which was a further drop from the previous year’s Sh9.8 billion.
CONTRACT MANUFACTURING
The cigarette maker announced Sh4.3 billion in profit after tax in the period under review up from Sh3.7 billion it posted over a similar period in 2013 with gross turnover jumping 7 per cent.
“This (gross revenue) was driven by incremental contract manufacturing volumes from the Democratic Republic of Congo… which pushed up exports by 26 per cent,” managing director Chris Burrell said at an investor briefing yesterday.
BAT exports its products to over 15 countries including Uganda, Rwanda, Tanzania, Madagascar, Mauritius and nations in the Horn of Africa.
Mr Burrell noted that BAT benefited from depression of the shilling against the dollar, which resulted in higher foreign exchange gains from exports sales.
The company’s cost of financing declined by 8 per cent to Sh276 million down from Sh301 million the previous period, underlining the cigarette maker’s cost containment strategies.
Last year, BAT invested Sh1.5 billion in its Nairobi plant with a view of supporting ‘growing’ contract manufacturing volumes from its subsidiaries in the region.
VALUE ADDED TAX
The tobacco industry has had to deal with unpredictable tax regime because it is one of government’s main targets when raising revenue.
For instance, in the year to December 2014, BAT saw its excise and value added tax payment increase by 7 per cent to Sh13.1 billion up from Sh12.2 billion in 2013.
The High Court last month saved BAT from a Sh346 million tax demand from the Kenya Revenue Authority following an eight-year dispute on whether its products should be taxed on their retail price or their characteristics.
