Cigarette manufacturer BAT Zimbabwe recorded a 48 percent increase in revenue for the half year to June 2019 despite sales volumes having dropped by 20 percent, financial director Leslie Malunga told an analysts and media briefing yesterday.
Mr Malunga said significant volumes decline was recorded in the company’s value for money brands, which decreased by 21 percent.
“Sinking consumer disposable incomes contributed to the volumes decline,” Mr Malunga said.
There was also an 87 percent drop in sales volume for imported brand Dunhill, a result of the company’s inability to import the brand as duties are required in foreign currency for a brand that is then sold in local dollars.
“Critically, shortages of foreign currency and electricity compromised the efficiency and overall production capacity for those in the manufacturing sector, said Mr Malunga.
He, however, said the company had still managed to record higher sales and profitability in comparison with same period last year.
Revenue for the period under review was up 48 percent to $9,6 million driven by price increases targeted at containing an increase in costs.
The prices increases helped gross profit margins increase 61 percent to $8,9 million.
There was also a margin boost from the positive impact from raw materials sourced at lower prices.
Inflationary pressures, however, still managed to weigh on profitability with marketing costs increasing by 54 percent to $3,9 million.
Administrative expenses went up by 117 percent driven by once off restructuring costs and the economic inflationary pressures.
Net profit at $8,5 million was 15 percent up from prior year comparative. The company did not declare a dividend to allow reinvestment in the operations of the Company.
Acting managing director Stephen Nyabadza expressed confidence that going forward, the company’s strategy remained appropriate to the operating environment.–herald.co.zw