British American Tobacco Kenya #ticker:BAT has reported a 21.2 per cent drop in net profit for the full year ended December 31, 2017, weighed down by lower sales in the wake of a weak performance in the Kenyan and export markets.
The Nairobi Securities Exchange-listed cigarette maker made a net profit of Sh3.3 billion in the period compared with Sh4.2 billion a year earlier as gross revenue declined six per cent to Sh34.4 billion.
“The company navigated an unexpectedly difficult trading environment in Kenya and across our exports markets,” said BAT Kenya in a statement.
Taxes
The company says its sales in Kenya fell due to excise tax increments over the years, coupled with the extended electioneering period last year.
It said that this has also eroded taxes paid to the government.
“The 50 per cent increase of tax at the end of 2015 has continued to have an impact on our consumers. On the back of that tax increase we obviously have to increase the price of the cigarettes significantly.
“The reaction from the consumer is either to choose to spend their money elsewhere or to down trade to cheaper cigarettes. That has a direct impact on the industry,” said BAT Kenya managing director Beverly Spencer-Obatoyinbo during an investor briefing on Friday.
“We are still feeling the ripples of that. That is why we encourage the government to look forward to have a more predictable operating environment.”
Dividend
The firm declared a final dividend of Sh22.50 per share subject to approval by shareholders.
This rises to a total dividend of Sh26 per share when added to the interim dividend already paid.
The company has more than 10 brands sold in the Kenyan market.
Its Nairobi factory is a manufacturing hub for 11 markets in the Middle East and East Africa region.