Kenya: BAT shakes off Covid-19 fallout as profit up 42pc
Feb 19, 2021: British American Tobacco (BAT) Kenya had defied effects of Covid-19 to raise full dividend payout by more than a third after profits for the year to December jumped 42 per cent.
The cigarette maker announced Thursday that its profit after-tax climbed to Sh5.52 billion, rebounding from a 4.9 percent drop to Sh3.89 billion in 2019.
This saw it announce a final dividend payment of Sh41.50 per share, bringing the total payout per unit for the year to Sh45, a 34.33 percent jump from Sh33.50 per share in 2019.
The payout is a boost to cigarette maker’s shareholders whose stock at the Nairobi Securities Exchange has been the best performer this year, up 22 percent to Sh437 a piece.
“The revenue decline was mitigated by higher export sales which demonstrated continued strategic importance of BAT Kenya hub factory in ensuring a balanced and sustainable business,” said the cigarette maker.
Net revenue edged up 5.41 percent to Sh25.34 billion, the Nairobi Securities Exchange-listed firm reported, citing higher exports than domestic sales which helped cut excise duty bills in Kenya.
Domestic sales revenue fell 24 percent amid economic fallout emanating from the global coronavirus pandemic, resulting in a 2.47 percent drop in gross revenue to Sh38.85 billion.
BAT’s earnings were further boosted by the reduction in corporate income tax rate to 25 per cent from 30 percent and value added tax to 14 percent from 16 percent as the government moved to cushion businesses and families from the pandemic knocks between April and December 2020.
The firm’s initiatives to protect profit margins for shareholders amid a Covid-19 economy yielded a 3.07 percent decline in cost of operations to Sh17.75 billion.
The firm is betting on the new factory for making oral nicotine pouches in Nairobi to continue lifting earnings going forward, despite protestations from public health officials.
Public health officials, led by Health Cabinet secretary Mutahi Kagwe, and a host of civil society lobbies such as International Institute for Legislative Affairs have resisted the sale of nicotine pouches locally, trading under Lyft brand.
BAT Kenya, however, insists the new products are less harmful to the health of users and are an alternative to cigarettes which have been linked to increased risk of contracting life-threatening diseases such as cancer as well lung and heart diseases.