Cigarette manufacturer BAT Kenya on Wednesday reported a Ksh2.7 billion half year profit for the period ended June 30, 2020 recording an 8% growth from the Ksh2.5 billion profit it reported at a similar period in 2019.
The rise in profit is attributable to a decline in the cost of operations and cost management initiatives. However the company stressed it is in for a tough financial year due to the outbreak of the COVID-19 Pandemic.
According to the company’s financial results released on Thursday, BAT’s net revenue declined by 6,7% to Ksh10.5 billion down from Ksh11.3 billion on lower sales.
Conversely, the company’s operating profit increased slightly to Ksh3.74 billion from Ksh3.73 billion while profit after tax adjusted up to Ksh2.67 billion from Ksh2.52 billion.
Gross revenue reduced by 13.6% to Ksh 16.6 billion driven by lower domestic and export revenue.
“The company demonstrated resilience amidst the disruption of the COVID-19 pandemic, which worsened an already challenging external operating environment. The economic impact of the COVID-19 pandemic put severe pressure on consumer affordability and adversely impacted the trading environment as retailing outlets closed,” the company said in a statement.
“Looking forwards, our primary focus continues to be keeping our employees safe through the pandemic, securing employment through maintaining business continuity and working with relevant government agencies to ensure a stable and predictable regulatory environment, which will support economic recovery,” further read the statement.
The manufacturer however enjoyed some reprieve in the shape of reduced contribution to government revenues in the form of Excise Duty, Value Added Tax (VAT), Pay As You Earn (PAYE) and Corporation Tax which reduced by Ksh 1.9 billion to Ksh 7.4 billion in line with lower domestic volumes and changes in tax rates effected by government to mitigate adverse impact of the COVID-19 pandemic.
Consequently. BAT’s board of directors has approved an interim dividend of Ksh 3.50 per share.
The interim dividend, which is subject to withholding tax, will be paid to shareholders on August 21, 2020.